UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
Geriatric & Medical Companies, Inc.
(Name of issuer)
Common Stock, $0.10 par value
(title of class of securities)
373 748 10 2
(CUSIP number)
Edward J. DeMarco, Jr., Esquire
Mesirov Gelman Jaffe Cramer & Jamieson
1735 Market Street
Philadelphia, PA 19103
1-215-994-1102
(Name, address and telephone number of persons authorized
to receive notices and communications)
July 11, 1996
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
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this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with this statement /X/. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
(Continued on following pages)
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* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
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CUSIP NO. 373 748 102 | 13D |PAGE 2 OF
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1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Daniel Veloric
SSN: ###-##-####
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2 Check the Appropriate Box If a Member of a Group
a. |_|
b. |_|
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3 SEC Use Only
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4 Source of Funds*
PERSONAL FUNDS
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
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2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
USA
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7 Sole Voting Power
Number of
Shares (See Attachment A, Item 5)
Beneficially --------------------------
Owned By 8 Shared Voting Power
Each
Reporting (See Attachment A, Item 5)
Person --------------------------
With 9 Sole Dispositive Power
(See Attachment A, Item 5)
--------------------------
10 Shared Dispositive Power
(See Attachment A, Item 5)
--------------------------
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
3,748,178 (See Attachment A, Item 5)
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12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
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13 Percent of Class Represented By Amount in Row (11)
24.29% (See Item 5.)
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14 Type of Reporting Person*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
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ATTACHMENT A TO SCHEDULE 13D
ITEM 1. Security and Issuer.
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The Reporting Person is the holder of Common Stock, $.10 par value ("Common
Stock") of Geriatric and Medical Companies, Inc. (the "Issuer"), 5601 Chestnut
Street, Philadelphia, Pennsylvania 19139.
ITEM 2. Identity and Background.
(a) Daniel Veloric
(b) 5601 Chestnut Street, Philadelphia, Pennsylvania 19139.
(c) Chairman of Board of Directors of the Issuer, 5601 Chestnut Street,
Philadelphia, Pennsylvania 19139.
(d) None
(e) None
(f) U.S.A.
ITEM 3. Source and Amount of Funds or Other Consideration.
All shares of Common Stock of the Issuer were purchased with the personal
funds of the Reporting Person.
ITEM 4. Purpose of the Transaction.
The Reporting Person acquired the Common Stock of the Issuer for general
investment purposes. The Reporting person has no plans or proposals which relate
to ITEMS 4(b) through (i). The Reporting person has plans or proposals which
relate to ITEM 4(a), as described further below.
(a) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
On July 11, 1996, Geriatric & Medical Companies, Inc., a Delaware
corporation (the "Company"), entered into an
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Agreement and Plan of Merger (the "Merger Agreement") with Genesis Health
Ventures, Inc., a Pennsylvania corporation ("Acquiror"), and G Acquisition
Corporation, a Delaware corporation ("Newco").
In connection with the execution of the Merger Agreement, Daniel Veloric
("Veloric"), the Chairman of the Board of Directors of the Company, and certain
companies, of which Veloric is the beneficial owner, have reached certain
understandings with Acquiror. The Special Committee of the Board of Directors of
the Company and its independent legal counsel have been advised as to the
character and terms of the understandings reached by Veloric and Acquiror.
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In connection with the Merger, Holdings, Tomahawk Capital Holdings, Inc.,
and Veloric (collectively, the "Stockholder"), Acquiror and Newco entered into a
Stockholder Option and Proxy Agreement dated as of July 11, 1996 (the
"Agreement") pursuant to which Stockholder granted to Newco (i) an option (the
"Stock Option") to purchase the shares of common stock of the Company owned by
Stockholder (the "Shares") and (ii) an irrevocable proxy (the "Proxy") with
respect to the Shares. The Stock Option entitles Acquiror to purchase the Shares
owned by the Stockholder for a purchase price (the "Exercise Price") of $5.75
per Share. Stockholder owns 3,748,178 shares of Company Common Stock,
representing approximately 24.2% of the issued and outstanding shares of Company
Common Stock. Under the Agreement, the Stockholder agrees to vote (or cause to
be voted) the Shares owned by it in any circumstance in which the vote or
approval of the stockholders of the Company is sought (i) in favor of adoption
and approval of the Merger Agreement and the Merger and the terms thereof and
each of the other actions contemplated by the Merger Agreement and the
Agreement; (ii) against any action or agreement that would result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Company contained in the Merger Agreement or of any Stockholder under the
Agreement; and (iii) against any action, agreement or transaction that is
intended or could reasonably be expected to facilitate a person other than Newco
or its affiliates in acquiring control of the Company or any other action,
agreement or transaction (other than the Merger Agreement or the transactions
contemplated thereby) that is intended, or could reasonably be expected to
impede, interfere or be inconsistent with, delay, postpone, discourage or
materially adversely affect the consummation of the Merger or the performance by
the parties of their respective obligations under this Agreement. Under the
Agreement, the Stockholder irrevocably granted to Newco and appointed Newco
(with full power of substitution) its proxy to vote the Shares owned by the
Stockholder in the manner described above. The proxy terminates on the earlier
of the day following the Effective Time and the date which is one year following
the termination of the Merger Agreement.
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ITEM 5. Interest in Securities of the Issuer.
(a) The Reporting Person hereby reports beneficial ownership of 3,748,178
shares of Common Stock, such beneficial ownership having been
previously reported on Form 13G. The shares of Common Stock held by
the Reporting Person represents 24.29% of the outstanding Common Stock
of the Issuer.
The foregoing percentages assume that the Issuer has 15,429,600 shares of
Common Stock outstanding.
(b) The number of shares as to which there is sole power to vote or
direct the vote, shared power to vote or direct the vote, sole
power to dispose or direct the disposition, or shared power to
dispose or direct the disposition, is the same as in paragraph
(a) and the Response to ITEM 4(a) above.
(c) Other than described herein, the Reporting Person has effected no
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transactions in shares of Common Stock of the Issuer during the
past sixty days or within sixty days of the date of this Schedule
13D.
(d) See Response to ITEM 4(a) above.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understands or Relationships with Respect to
Securities of the Issuer.
Not Applicable.
ITEM 7. Material to be Filed as Exhibits.
EXHIBIT 99.A Agreement and Plan of Merger dated July 11, 1996, by
and among Genesis Health Ventures, Inc., Geriatric &
Medical Companies, Inc. and G Acquisition Corporation.
EXHIBIT 99.B Stockholder Option and Proxy Agreement Dated as of July
11, 1996 between G Acquisition Corporation, Tomahawk
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Holdings, Inc., Tomahawk Capital Holdings, Inc.,
Daniel J. Veloric and Genesis Health Ventures, Inc.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
/s/ Daniel Veloric
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DANIEL VELORIC
August 15, 1996
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EXHIBIT 99.A
PLAN AND AGREEMENT OF MERGER
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EXHIBIT 99.A
PLAN AND AGREEMENT OF MERGER
AGREEMENT AND PLAN OF MERGER
Parties: GENESIS HEALTH VENTURES, INC.
a Pennsylvania corporation ("Acquiror")
148 West State Street
Kennett Square, PA 19348
GERIATRIC & MEDICAL COMPANIES, INC.
a Delaware corporation ("GMC")
5601 Chestnut Street
Philadelphia, PA 19139
G ACQUISITION CORPORATION
a Delaware corporation ("Newco")
148 West State Street
Kennett Square, PA 19348
Dated as of: July 11, 1996
Background:
WHEREAS, the respective Boards of Directors of Acquiror, Newco and GMC have
approved the merger of Newco into GMC, as set forth below (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement, whereby
each issued and outstanding share of Common Stock, par value $.10 per share, of
GMC (the "GMC Common Stock"), other than shares owned directly or indirectly by
Acquiror or GMC and Dissenting Shares (as defined in Section 2.5(d)), will be
converted into the right to receive the Merger Consideration (as defined in
Section 2.5(c)); and
WHEREAS Acquiror, Newco and GMC desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein and subject to the satisfaction of the
terms and conditions set forth herein, the parties, intending to be legally
bound, agree as follows:
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SECTION 1: DEFINED TERMS
Certain defined terms used in this Agreement and not specifically defined
in context are defined in this Section 1, as follows:
1.1 "Accounts Receivable" means (a) any right to payment for goods sold,
leased or licensed or for services rendered, whether or not it has been earned
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by performance, whether billed or unbilled, and whether or not it is evidenced
by any Contract, (b) any note receivable, or (c) any other receivable or right
to payment of any nature.
1.2 "Asset" means any real, personal, mixed, tangible or intangible
property of any nature, including, but not limited to, (a) Cash Assets, (b)
Accounts Receivable, (c) other current assets of any nature including, but not
limited to, prepayments, deposits and escrows, (d) Tangible Property, (e) Real
Property, (f) Software, (g) Intangibles, (h) Contract Rights, (i) claims, causes
of action and other legal rights and remedies of any nature, and (j) good will
and miscellaneous assets of any nature including, but not limited to, rights
with respect to telephone numbers, rights with respect to telephone and other
directory listings, marketing materials and advertisements, books and records,
correspondence files, data bases, customer lists, prospect lists, supplier
lists, and other files and records of any nature, whether stored in written form
or on any type of computer, electronic or other media.
1.3 "Businesses" means the pharmacy, medical supplies, durable medical
equipment, rehabilitative therapies, ambulance transportation, paratransit,
contract management, financial, diagnostic services, home care, assisted living,
comprehensive personal care, residential health care and long-term care
businesses and other businesses conducted by the GMC Companies.
1.4 "Cash Asset" means any cash on hand, cash in bank or other accounts,
readily marketable securities, and other cash-equivalent liquid assets of any
nature.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Consent" means any consent, approval, order or authorization of, or
any declaration, filing or registration with, or any application or report to,
or any waiver by, or any other action (whether similar or dissimilar to any of
the foregoing) of, by or with, any Person which is necessary in order to take a
specified action or actions in a specified manner and/or to achieve a specified
result or to avoid the occurrence of a default or breach.
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1.7 "Contract" means any written or oral contract, agreement, instrument,
order, arrangement, commitment or understanding of any nature, including, but
not limited to, sales orders, purchase orders, leases, subleases, maintenance
agreements, license agreements, sublicense agreements, loan agreements,
promissory notes, security agreements, pledge agreements, deeds, mortgages,
guaranties, indemnities, warranties, employment agreements, consulting
agreements, sales representative agreements, joint venture agreements,
settlement agreements, release agreements, termination agreements, buy-sell
agreements, options or warrants; but not including Employee Benefit Plans.
1.8 "Contract Right" means, with respect to any Person, any right, power or
remedy of any nature of such Person under any Contract including, but not
limited to, rights to receive property or services or otherwise derive benefits
from the payment, satisfaction or performance of another party's Obligations,
rights to demand that another party accept property or services or take any
other actions, and rights to pursue or exercise remedies or options.
1.9 "Employee Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA, or any other plan, trust agreement, program, policy or
arrangement for or regarding bonuses, commissions, incentive compensation,
severance, hospitalization, vacation, deferred compensation, pensions, profit
sharing, retirement, payroll savings, stock options, stock purchases, stock
awards, stock ownership, equity compensation, phantom stock, stock appreciation
rights, medical/dental expense payment or reimbursement, disability income or
protection, sick pay, group insurance, self insurance, death benefits, employee
welfare or fringe benefits of any nature, including without limitation, those
benefiting retirees or former employees; but not including employment Contracts
with individual employees.
1.10 "Encumbrance" means any lien, security interest, pledge, mortgage,
judgment, easement, leasehold, assessment, covenant, restriction, reservation,
conditional sale, prior assignment, or other encumbrance, claim, burden or
charge of any nature.
1.11 "Environmental Laws" means all Laws relating to pollution, protection
of the environment, health, safety, or the exposure of persons to Hazardous
Substances, including, without limitation, Laws relating to emissions,
discharges, releases or threatened releases into the environment (including,
without limitation, ambient air, surface water, ground water or land) of any
Hazardous Substances identified or regulated under any such Environmental Laws.
1.12 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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1.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
1.14 "Facilities" means assisted living residences, comprehensive personal
care facilities, residential health care facilities and long term care
facilities owned, operated or managed by any of the GMC Companies.
1.15 "GAAP" means generally accepted accounting principles under United
States accounting rules and regulations, as in effect from time to time,
consistently applied.
1.16 "GMC Companies" means GMC, the GMC Subsidiaries and the GMC
Partnerships.
1.17 "GMC Partnerships" means each general or limited partnership in which
any GMC Company holds any partnership interest.
1.18 "GMC Subsidiaries" means each of the Subsidiaries of GMC.
1.19 "Hazardous Substances" means any substance, waste, contaminant,
pollutant or material that has been determined by any Law or any United States
federal government authority, or any state or local government authority having
jurisdiction over Real Property owned, leased, used or occupied by any of the
GMC Companies, to be capable of posing a risk of injury or damage to health,
safety, property or the environment, including, but not limited to, (a) all
substances, wastes, contaminants, pollutants and materials defined or designated
as hazardous, dangerous or toxic pursuant to any Law of the state in which such
Real Property is located or any United States Law, and (b) urea-formaldehyde,
polychlorinated byphenyls, asbestos or asbestos-containing materials, nuclear or
radioactive fuel or waste, radon, explosives, known carcinogens, petroleum,
petroleum products, or any other waste, material, substance, pollutant or
contaminant that might cause any injury to human health or safety or to the
environment or might subject the owner, operator, possessor or occupier of such
Real Property to any claims, causes of action, costs damages, penalties,
expenses, demands or liabilities, however defined, under any applicable Law.
1.20 "Insurance Policy" means any public liability, product liability,
general liability, comprehensive, property damage, vehicle, life, hospital,
medical, dental, disability, workers' compensation, key man, fidelity bond,
theft, forgery, errors and omissions, directors' and officers' liability,
owner's title, or other insurance policy or binder of any nature.
1.21 "Intangible" means any name, corporate name, fictitious name,
trademark, trademark application, service mark, service mark application, trade
name, brand name, product name,
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slogan, trade secret, know-how, patent, patent application, copyright, copyright
application, Software, design, logo, formula, invention, product right or other
intangible asset of any nature, whether in use, under development or design, or
inactive.
1.22 "Inventory" means any raw materials, supplies, work-in-progress,
finished goods, parts or other inventory of any nature whatsoever.
1.23 "Judgment" means any order, writ, injunction, fine, citation, award,
decree or other judgment of any nature of any foreign, federal, state or local
court, governmental body, administrative agency, regulatory authority or
arbitration tribunal.
1.24 "Knowledge" with reference to the phrases "to the Knowledge of the GMC
Companies" or "to the best of the GMC Companies' Knowledge" or similar phrases
means that none of the directors of GMC, none of the executive officers of GMC
set forth on Schedule 1.24, and none of the chief operating officers of each of
the Businesses set forth on Schedule 1.24 have any actual knowledge or actual
belief after due inquiry that the statement made is incorrect.
1.25 "Law" means any provision of any foreign, federal, state or local law,
statute, ordinance, order, charter, constitution, treaty, rule or regulation,
guideline, consent order, decree or agreement, including without limitation,
common law.
1.26 "Material Adverse Change" or "Material Adverse Effect" means any
change or effect which, when taken together with all other adverse changes and
effects which are not individually deemed to be a "Material Adverse Change" or
have a "Material Adverse Effect", is or is reasonably likely to be materially
adverse to the Assets, business, financial condition or results of operations of
the GMC Companies, taken as a whole, excluding in all cases: (i) events or
conditions generally affecting the industries in which the GMC Companies operate
or arising from changes in general business or economic conditions; (ii) all
reasonable out-of-pocket fees and expenses (including, without limitation,
reasonable legal, accounting, investigatory and other fees and expenses)
incurred by GMC in connection with the transactions contemplated by this
Agreement; (iii) the payment by the GMC Companies of all amounts due to any
officers or employees of the GMC Companies under employment contracts or other
employee benefit plans or programs in effect as of the date hereof and disclosed
to Acquiror prior to the date hereof and not in breach of any of the terms of
this Agreement; (iv) any effect resulting from any change in Law or GAAP, which
affects generally entities such as the GMC Companies; and (v) any effect
resulting from compliance by the GMC Companies with the terms of this Agreement.
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1.27 "Obligation" means any debt, liability or obligation of any nature,
whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated,
accrued, absolute, fixed, contingent, ascertained, unascertained, known, unknown
or otherwise.
1.28 "Permit" means any license, permit, approval, certificate, consent,
waiver, order, authorization, registration, right or privilege of any nature,
granted, issued, approved or allowed by any foreign, federal, state or local
governmental body, administrative agency or regulatory authority or any Person
acting on behalf of any such body, agency or authority.
1.29 "Person" means any individual, sole proprietorship, joint venture,
partnership, corporation, limited liability company or partnership, association,
cooperative, trust, estate, governmental body, administrative agency, regulatory
authority or other entity of any nature.
1.30 "Proceeding" means any claim, demand, suit, action, litigation,
investigation, arbitration, audit, hearing or other legal proceeding of any
nature, or any formal demand which might lead to any of the foregoing.
1.31 "Real Property" means any real estate, land, building, condominium,
town house, structure, improvement or other real property of any nature, all
shares of stock or other ownership interests in cooperative or condominium
associations or any other corporation owning real estate, partnership interests
in partnerships, membership interests in limited liability companies or other
forms of ownership interest through which interests in real estate are held, and
all appurtenant and ancillary rights thereto, including, but not limited to,
easements, covenants, water rights, sewer rights and utility rights.
1.32 "Securities Act" means the Securities Act of 1933, as amended.
1.33 "Software" means any computer program, operating system, applications
system, firmware or software of any nature, whether operational, under
development or inactive, including, but not limited to, all object code, source
code, technical manuals, user manuals and other documentation therefor, whether
in machine-readable form, programming language or any other language or symbols,
and whether stored, encoded, recorded or written on disk, tape, film, memory
device, paper or other media of any nature.
1.34 "Subsidiary" means any Person in which a majority of any direct or
indirect equity or ownership interest is owned, of record or beneficially, by
another Person or a direct or indirect Subsidiary of such other Person.
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1.35 "Tangible Property" means any furniture, fixtures, buildings,
leasehold improvements, vehicles, office equipment, computer equipment, other
equipment, machinery, tools, forms, supplies or other tangible personal property
of any nature, whether constituting fixed assets, inventory or otherwise.
1.36 "Tax" means (a) any foreign, federal, state or local income, earnings,
profits, gross receipts, franchise, capital stock, net worth, sales, use,
occupancy, general property, real property, personal property, intangible
property, realty transfer, fuel, excise, payroll, withholding, unemployment
compensation, social security or other tax of any nature, (b) any foreign,
federal, state or local organization fee, qualification fee, annual report fee,
filing fee, occupation fee, assessment, sewer rent or other fee or charge of any
nature, and (c) any deficiency, interest or penalty imposed with respect to any
of the foregoing.
SECTION 2: THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL"), Newco shall be merged with and into GMC at the Effective Time (as
hereinafter defined). Following the Merger, the separate corporate existence of
Newco shall cease and GMC shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of GMC and Newco in accordance with the DGCL. At the election of
Acquiror, any direct or indirect wholly owned Subsidiary of Acquiror may be
substituted for Newco as a constituent corporation in the Merger. In such event,
the parties agree to execute an appropriate amendment to this Agreement in order
to reflect the foregoing.
2.2 Closing. The closing of the Merger (the "Closing") will take place at
10:00 a.m. on a date to be specified by Acquiror or Newco, which may be on, but
shall be no later than the third business day after, the day on which there have
been satisfaction or waiver of the conditions set forth in Section 8 and Section
9 (the "Closing Date"), at the offices of Blank Rome Comisky & McCauley,
Philadelphia, Pennsylvania, unless another date or place is agreed to in writing
by the parties hereto.
2.3 Effective Time. On the Closing Date, or as soon as practicable
thereafter, the parties shall file a certificate of merger or other appropriate
documents (in any such case, the "Certificate of Merger") executed in accordance
with the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of Delaware, or at such other time as Newco and GMC shall agree should
be specified in
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the Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
2.4 Effects of the Merger. The Merger shall have the effects set forth in
Section 259 of the DGCL. Without, limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of GMC and Newco shall vest in the Surviving Corporation,
and all debts, liabilities and duties of GMC and Newco shall become the debts,
liabilities and duties of the Surviving Corporation.
2.5 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action an the part of the holder of any shares of GMC
Common Stock or any shares of capital stock of Newco:
(a) Capital Stock of Newco. Each share of the capital stock of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of common
stock, no par value, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Acquiror Owned Stock. Each
share of GMC Common Stock that is owned by GMC or by any GMC Subsidiary and each
share of GMC Common Stock that is owned by Acquiror, Newco or any other
Subsidiary of Acquiror shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of GMC Common Stock. Subject to Section 2.5(d), each
issued and outstanding share of GMC Common Stock (other than shares to be
canceled in accordance with Section 2.5(b)) shall be converted into the right to
receive from the Surviving Corporation $5.75 in cash, without interest (the
"Merger Consideration"). As of the Effective Time, all such shares of GMC Common
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of GMC Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding shares of GMC Common Stock
held by a Person (a "Dissenting Stockholder") who objects to the Merger and
complies with all the provisions of the DGCL concerning the right of
stockholders to dissent from the Merger and require appraisal of their shares of
GMC Common Stock ("Dissenting Shares") shall not be converted as described in
Section 2.5(c) but shall become the right to receive such consideration as may
be determined to be due to such Dissenting Stockholder pursuant to DGCL. If,
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after the Effective Time, such Dissenting Stockholder withdraws his demand for
appraisal or fails to perfect or otherwise loses his right of appraisal, in any
case pursuant to the DGCL, his shares of GMC Common Stock shall be deemed to be
converted as of the Effective Time into the right to receive the Merger
Consideration, without interest. GMC shall give Acquiror (i) prompt notice of
any demands for appraisal of shares of GMC Common Stock received by GMC and (ii)
the opportunity to participate in and direct all negotiations and proceedings
with respect to any such demands. GMC shall not, without the prior written
consent of Acquiror, make any payment with respect to, or settle, offer to
settle or otherwise negotiate, any such demands.
2.6 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Acquiror shall
designate a bank or trust company to act as paying agent (the "Paying Agent")
for the payment of the Merger Consideration, and Acquiror shall deposit or shall
cause to be deposited with the Paying Agent in a separate fund established for
the benefit of the stockholders of GMC Common Stock (the "Stockholders"), for
payment in accordance with this Section 2, through the Paying Agent (the
"Payment Fund"), immediately available funds in amounts necessary to make the
aggregate payments pursuant to Section 2.5(c) to Stockholders (other than GMC,
any GMC Subsidiary, Acquiror, Newco or any other Subsidiary of Acquiror, or
holders of Dissenting Shares). The Paying Agent shall, pursuant to irrevocable
instructions, pay the Merger Consideration out of the Payment Fund.
The Paying Agent shall invest portions of the Payment Fund as Acquiror
directs in obligations of or guaranteed by the United States of America, in
commercial paper obligations receiving the highest investment grade rating from
both Moody's Investors Services, Inc. and Standard & Poor's Corporation, or in
certificates of deposit, bank repurchase agreements or banker's acceptances of
commercial banks with capital exceeding $1,000,000,000 (collectively, "Permitted
Investments"); provided, however, that the maturities of Permitted Investments
shall be such as to permit the Paying Agent to make prompt payment to former
Stockholders entitled thereto as contemplated by this Section. All earnings of
Permitted Investments shall be paid to Acquiror. If for any reason (including
losses) the Payment Fund is inadequate to pay the amounts to which Stockholders
shall be entitled under Section 2.5(c), Acquiror shall nonetheless be liable for
payment thereof. The Payment Fund shall not be used for any purpose except as
expressly provided in this Agreement. On the first business day which is three
months after the Effective Time, all portions of the Payment Fund not
theretofore paid to former Stockholders shall be remitted to the Surviving
Corporation and former Stockholders shall thereafter look solely to the
Surviving Corporation for payment of the Merger Consideration.
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(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each Stockholder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of GMC Common Stock (the "Certificates") whose
shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.5, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Acquiror may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Acquiror, together with such letter of transmittal, duly executed
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
amount of cash into which the shares of GMC Common Stock theretofore represented
by such Certificate shall have been converted pursuant to Section 2.5, and the
Certificate so surrendered shall forthwith be canceled. If the Merger
Consideration (or any portion thereof) is to be delivered to a Person other than
the Person in whose name the Certificates surrendered in exchange therefor are
registered, it shall be a condition to the payment of the Merger Consideration
to such Person that the Certificates so surrendered shall be properly endorsed
or accompanied by appropriate stock powers and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the Person requesting
such transfer pay to the Paying Agent any transfer or other Taxes payable by
reason of the foregoing or establish to the satisfaction of Acquiror that such
Taxes have been paid or are not required to be paid. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed, the Paying Agent will issue in exchange for such lost,
stolen or destroyed certificate the Merger Consideration deliverable in respect
thereof, provided that the Person to whom the Merger Consideration is paid
shall, as a condition precedent to the payment thereof, give the Surviving
Corporation a bond in such sum as it may direct or to otherwise indemnify the
Surviving Corporation in a manner satisfactory to it against any claim that may
be made against the Surviving Corporation with respect to the Certificate
alleged to have been lost, stolen or destroyed. Until surrendered as
contemplated by this Section 2.6, each Certificate shall after the Effective
Time represent only the right to receive upon such surrender the amount of cash,
without interest, into which the shares of GMC Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
2.5. No interest will be paid or will accrue on the cash payable upon the
surrender of any Certificate.
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(c) No Further Ownership Rights in Company Common Stock. All cash paid
upon the surrender of Certificates in accordance with the terms of this Section
2 shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of GMC Common Stock theretofore represented by such
Certificates, and there shall be no further registration of transfers, on the
stock transfer books of the Surviving Corporation of the shares of GMC Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Section 2, except as otherwise provided by Law.
(d) No Liability. None of Acquiror, Newco, GMC or the Paying Agent
shall be liable to any Person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
(e) Withholding Rights. Acquiror shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any Stockholder such amounts as Acquiror is required to deduct and withhold with
respect to the making of such payment under the Code or any provision of state,
local or foreign Tax Law. To the extent that amounts are so withheld by
Acquiror, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the Stockholder in respect of which such
deduction and withholding was made by Acquiror.
2.7 Stock Options and Warrants. The Board of Directors of GMC (or, if
appropriate, any Committee thereof) (a) contemporaneously with the approval of
this Agreement has adopted appropriate resolutions and taken all other actions
necessary to provide that, effective immediately prior to the Effective Time,
each outstanding stock option held by employees or directors of GMC or other
Persons to purchase GMC Common Stock (such stock options are hereinafter
referred to collectively as the "Options") heretofore granted under any GMC
Option Plans or the LTIP (as such terms are defined in Section 3.5)), and (b) as
soon as practicable following the date of this Agreement shall use its
reasonable efforts to provide that outstanding warrants to purchase 100,000
shares of GMC Common Stock under that certain agreement between GMC and Tripp &
Co., Inc. (the "Tripp Warrant"), in either case whether or not then vested or
exercisable, shall no longer be exercisable for the purchase of shares of GMC
Common Stock but shall entitle each holder thereof, in cancellation and
settlement therefor, to a payment in cash (subject to any applicable withholding
taxes, the "Cash Payment"), equal to the product of (x) the total number of
shares of GMC Common Stock subject to each such Option or the Tripp Warrant held
by such holder and (y) the excess of the Merger Consideration over the
respective exercise price per share of GMC Common Stock subject to such Option
or the Tripp Warrant. The
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Surviving Corporation shall pay each such Cash Payment to each holder of an
outstanding Option or the Tripp Warrant on the date or dates occurring on or
after the Effective Time on which such holder surrenders such Option or the
Tripp Warrant for payment. Any stock appreciation rights, phantom stock rights,
cash performance units, or similar rights including, without limitation, long
term incentive plans (except for the LTIP with respect to outstanding awards set
forth on Schedule 3.5), shall be cancelled as of immediately prior to the
Effective Time without any payment therefor. As provided herein, the GMC Option
Plans, the LTIP and any other Contract, plan, program or arrangement providing
for the issuance or grant of any other interest in respect of the capital stock
of GMC or any GMC Subsidiary (collectively with the GMC Option Plans, referred
to as the "GMC Stock Plans") shall terminate as of the Effective Time. GMC has
taken all steps necessary to ensure that no GMC Company is or will be bound by
any Options or the Tripp Warrant (except as otherwise required by this Section),
other options, warrants, rights or Contracts which would entitle any Person,
other than Acquiror or its affiliates, to own any capital stock of Acquiror, the
Surviving Corporation or any of their respective Subsidiaries or to receive any
payment in respect thereof. GMC shall use its best efforts to obtain all
necessary Consents to ensure that after the Effective Time, the only rights of
the holders of Options or the Tripp Warrant to purchase shares of Common Stock
in respect of such Options or the Tripp Warrant will be to receive the Cash
Payment in cancellation and settlement thereof as described above.
2.8 Certificate of Incorporation and By-Laws.
(a) The certificate of incorporation of Newco as in effect immediately
prior to the Effective Time shall be the certificate of incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable Law.
(b) The Bylaws of Newco as in effect at the Effective Time shall be
the Bylaws of the Surviving Corporation, until thereafter changed or amended as
provided therein or by Law.
2.9 Directors. The directors of Newco immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
2.10 Officers. The officers of Newco immediately prior to the Effective
Time shall become the officers of the Surviving Corporation, until the earlier
of their resignation or removal or until their successors are duly and elected
and qualified, as the case may be.
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2.11 Resignations. At the Closing, GMC shall use reasonable efforts to make
available to Acquiror and Newco the written resignations of such officers and
directors of each GMC Company as Acquiror shall request from all officerships
and directorships at the GMC Companies, effective as of the Closing Date.
2.12 Obligation with Respect to Certain Employee Benefits. Acquiror hereby
agrees that, as soon as reasonably practicable after the Effective Time,
Acquiror shall take such action as may be necessary to cause each of the GMC
Companies to maintain and provide for those employees of the GMC Companies not
covered by union or collective bargaining agreements, the employee welfare plans
and employee pension plans which are generally made available from time to time
to the employees of the Acquiror and its subsidiaries consistent with grade
levels.
SECTION 3: REPRESENTATIONS OF GMC
GMC represents and warrants to Acquiror and Newco as follows:
3.1 Organization and Subsidiaries. GMC and each of the GMC Subsidiaries is
a corporation duly organized, validly existing, and in good standing under the
Laws of the state of its incorporation. Each of the GMC Partnerships is a
partnership duly formed and validly existing under the Laws of the jurisdiction
of its formation. Each of the GMC Companies is duly qualified or registered to
do business as a foreign entity in each jurisdiction where the transaction of
its respective Businesses requires such qualification or registration except
where the failure to so qualify or register would not, or would not reasonably
be expected to, have any Material Adverse Effect. Schedule 3.1 sets forth an
accurate and complete list of each GMC Company, setting forth as to each GMC
Company, as applicable: (a) its exact legal name; (b) its jurisdiction and date
of formation; (c) its federal employer identification number; (d) its directors
and officers or partners, as applicable, indicating all current title(s) of each
individual; (e) its registered agent and/or office in its jurisdiction of
formation (if applicable); (f) all foreign jurisdictions in which it is
qualified or registered to do business and its registered agent and/or office in
each such jurisdiction (if applicable); (g) all fictitious, assumed or other
names of any type that are registered or used by it or under which it has done
business at any time since June 1, 1995; (h) any name changes, recapitalization,
mergers, reorganizations or similar events since June 1, 1995 and (i) the name
of and the percentage and nature of the interest or percentage of voting
securities owned by GMC or any GMC Company. Each of the GMC Companies has the
requisite power and authority to own its respective Assets and conduct its
respective Businesses as such Businesses are presently conducted. GMC has the
requisite corporate power and authority to enter into and perform this
Agreement. Accurate
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and complete copies of the charter and bylaws, partnership agreements and other
organizational documents, as applicable, of each of the GMC Companies, each as
amended to date, have been provided to Acquiror. All of the issued and
outstanding capital stock of each of GMC's Subsidiaries is duly authorized,
validly issued, fully paid and non-assessable, and was not issued in violation
of, any preemptive rights. GMC owns, directly or through a Subsidiary, all of
the issued and outstanding capital stock of each of the GMC Subsidiaries, free
and clear of all Encumbrances. Except for the GMC Subsidiaries listed on
Schedule 3.1, none of the GMC Companies owns any capital stock or other
securities of, or any interest in, any Person.
3.2 Authorization of Agreement. The execution, delivery, and performance of
this Agreement by GMC, and the consummation by GMC of the transactions
contemplated hereby, (a) have been authorized by all necessary corporate actions
by GMC's Board of Directors, (b) do not constitute a violation of or default
under (either immediately or upon notice, lapse of time or both) (i) the charter
or bylaws, partnership agreements or other organizational documents, as
applicable, of any of the GMC Companies, (ii) any material Permits held by any
of the GMC Companies or (iii) any material Contract to which any of the GMC
Companies is a party or by which any of the GMC Companies is bound, (c) do not
constitute a violation of any Law or Judgment which is applicable to any of the
GMC Companies or to any of the GMC Companies' Assets or Businesses, the
violation of which would, or would reasonably be expected to, have a Material
Adverse Effect, (d) except as set forth on Schedule 3.2, do not accelerate or
otherwise modify, or give any Person the right to accelerate or modify, any
material Obligation of any of the GMC Companies, (e) do not result in the
creation of any material Encumbrance upon, or give to any Person any material
interest in, any of the GMC Companies' Assets or Businesses or any shares of
capital stock or other security of GMC or any of GMC's Subsidiaries, and (f) do
not require the Consent of any Person except for (i) the approval of the board
of directors of GMC, which has already been obtained, (ii) the approval of the
stockholders of GMC as described in Section 5 of this Agreement, (iii) the
filing with the Securities and Exchange Commission ("SEC") of (x) a proxy
statement relating to the approval by GMC's stockholders of this Agreement (as
amended or supplemented from time to time, the "Proxy Statement") and (y) such
reports under Section 13(a) of the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement, (iv)
filings and approvals under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "Hart-Scott-Rodino Act"), (v) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, (vi) Consents of
government regulatory authorities described on Schedule 3.2, and (vii) other
Consents described on Schedule 3.2. This Agreement constitutes the valid and
legally binding agreement of GMC, enforceable against GMC in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
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insolvency and similar Laws affecting creditors' rights generally and to general
principles of equity (whether considered in a proceeding in equity or at Law).
GMC has received an opinion of CS First Boston Corporation to the effect that,
as of the date of this Agreement, the consideration to be received by the
holders of GMC Common Stock (as defined in Section 3.5 below) pursuant to the
Merger are fair to such holders from a financial point of view. That certain
Stock Option Agreement dated July 11, 1996 among inter alia Tomahawk Capital
Holdings, Inc., Tomahawk Holdings, Inc., Daniel Veloric, Newco and Acquiror has
been approved by the Board of Directors of GMC so that Section 203 of the DGCL
will not apply to the Stock Option Agreement, this Agreement or the transactions
contemplated thereby and hereby.
3.3 Compliance with Law. Each GMC Company's operations and the conduct of
each GMC Company's Businesses (including any discontinued or inactive business
or operations) as such Businesses have been or presently are conducted, have and
continue to comply with all applicable Laws, except where the failure to do so
would not, and would not reasonably be expected to, have any Material Adverse
Effect. Set forth on Schedule 3.3 is a complete list in all material respects of
all inspection reports, surveys, investigation reports, and audit reports made
or initiated by or reported to federal, state or local governmental agencies,
authorities and other Persons since May 31, 1994 regarding any Laws applicable
to any of the GMC Companies or their respective Businesses or Assets. To the
Knowledge of the GMC Companies, each GMC Company has filed all reports required
by all Laws to be filed including, without limitation, any and all Medicare and
Medicaid cost reports and all such reports complied in all material respects
with the requirements of applicable laws and regulations. Each of the GMC
Companies has duly paid or accrued on its books of account all applicable duties
and charges due or assessed against it pursuant to such reports, except duties
and charges with respect to which it has a bona fide dispute and which, if
resolved adversely to the GMC Companies, would not have a Material Adverse
Effect.
3.4 Permits. Each GMC Company has obtained and currently maintains in full
force and effect all material Permits required by Law or necessary to conduct
its respective Businesses as presently conducted, all of which Permits are
listed on Schedule 3.4(a). Each of the GMC Companies, each of the Facilities and
each of the Businesses set forth on Schedule 3.4(b), where applicable, are
eligible, and are fully certified and have the requisite Permits to participate
as providers under and to receive payment from Medicare, Medicaid (in each state
in which they operate), Civilian Health and Medical Program of the Uniformed
Services ("CHAMPUS"), Civilian Health and Medical Program of the Veteran's
Administration ("CHAMPVA") and any other Veterans Administration program. Except
as set forth on Schedule 3.4(c), no material violations or waivers have been
recorded in respect of any such Permit since May 31, 1994 and no Proceeding is
pending or, to the Knowledge of the GMC Companies, threatened
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to revoke, terminate, suspend or limit any such Permit or any GMC Company,
Facility or Business, or any assignee or successor thereof, from applying for
such Permits or developing or expanding any business in any material respect.
Except as set forth in Schedule 3.4(c), no GMC Company has received any notice
of any claim of material default or noncompliance with respect to any such
Permit or any notice of any other material claim or Proceeding (or threatened
Proceeding) relating to any such Permit. No GMC Company is in material default
with respect to any such Permits. To the extent applicable to its respective
Businesses, and except as disclosed on Schedule 3.4(c), each GMC Company has
correctly maintained in all material respects all records required by applicable
Laws or government agencies in connection with any such Permits, including
without limitation, by the FDA, DEA and State Boards and pursuant to the
requirements of Title XVIII and XIX of the Social Security Act.
3.5 GMC's Stock. The authorized capital stock of GMC consists of: (a)
16,000,000 shares of preferred stock, par value $.10 per share ("GMC Preferred
Stock"), of which no shares have been issued; and (b) 30,000,000 shares of
common stock, par value $.10 per share ("GMC Common Stock"), of which (i)
15,429,746 shares are issued and outstanding, (ii) 535,254 shares are reserved
for issuance pursuant to outstanding options granted under GMC's 1982 Incentive
Stock Option Plan, 1985 Stock Option Plan for Medical Directors, 1989 Stock
Option and Restricted Stock Plan, 1990 Stock Option Plan for Directors and 1994
Stock Option and Restricted Stock Plan for Directors (collectively, "GMC Option
Plans"), (iii) 100,000 shares are reserved for issuance pursuant to the exercise
of the Tripp Warrant, (iv) 493,500 shares are reserved for issuance pursuant to
outstanding awards under the Management Long Term Incentive Plan issued pursuant
to the 1995 Equity Incentive Plan (the "LTIP"), (v) no shares of which are held
in treasury and (vi) any changes to the foregoing caused by shares issued
pursuant to the exercise of outstanding stock options on the date hereof (GMC
Preferred Stock and GMC Common Stock being collectively referred to as "GMC
Stock"). All shares of GMC Stock which are outstanding are duly authorized and
validly issued, and are fully paid and nonassessable, and were not issued in
violation of, any preemptive rights. The number, price and material terms of the
options or awards outstanding under the GMC Option Plans and the LTIP are set
forth on Schedule 3.5. There are no voting trusts or other arrangements or
understandings to which GMC is a party in favor of any Person with respect to
the voting of GMC Stock or any other interest in GMC. Except as identified on
Schedule 3.5, there are no outstanding options, puts, calls, warrants,
subscriptions, stock appreciation rights, phantom stock, cash performance units,
or other Contracts or Contract rights granted by GMC relating to the GMC Stock
or to the offering, sale, issuance, redemption or disposition of the GMC Stock
or any shares of capital stock or other securities of any of the GMC Companies.
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3.6 GMC Financial Statements. The consolidated balance sheets of GMC and
the GMC Subsidiaries as of May 31, 1995 and the end of the four fiscal years
immediately preceding and the related consolidated statements of operations,
cash flows (or changes in financial position) and changes in stockholders'
equity (deficit) of GMC and the GMC Subsidiaries for each of the five fiscal
years ended May 31, 1995, and the unaudited consolidated balance sheets of GMC
and the GMC Subsidiaries as of August 31, 1995, November 30, 1995 and February
29, 1996 and the related consolidated statements of operations and cash flows of
GMC and the GMC Subsidiaries for the respective periods then ended, including
the related notes and schedules, which are contained in the SEC Documents (as
defined in Section 3.26), have been prepared in accordance with GAAP, complied
in all material respects as to form with applicable accounting requirements and
the rules and regulations of the SEC with respect thereto, are true and complete
in all material respects and fairly present the consolidated financial condition
and results of operations, cash flows (or changes in financial position) and
changes in stockholders' equity (deficit) of GMC and the GMC Subsidiaries as of
the dates and for the periods indicated subject, in the case of the unaudited
consolidated financial statements, to normal and recurring year-end adjustments
which were not and are not expected, individually or in the aggregate, to have a
Material Adverse Effect. The consolidated balance sheets of GMC and the GMC
Subsidiaries as of April 30, 1996 and the related consolidated statements of
operations for the eleven months ended April 30, 1996 which are attached on
Schedule 3.6 have been prepared by GMC in a manner consistent with GMC's past
practices, are true and complete in all material respects and fairly present the
consolidated financial condition and results of operations for the eleven months
ended April 30, 1996. The financial statements referred to in this section are
collectively referred to as "GMC's Financial Statements."
3.7 Assets. The GMC Companies own or lease all of the material Assets
necessary for the operation of the Businesses of the GMC Companies as presently
conducted. Each of the GMC Companies has good and valid title to all of its
Assets, free and clear of any material Encumbrance except for those subject to
security interests granted pursuant to loans or capital leases identified on
Schedule 3.11. To the Knowledge of the GMC Companies, all Assets owned by, under
lease to or otherwise used by any of the GMC Companies are in good condition,
ordinary wear and tear excepted.
3.8 Real Property.
(a) Schedule 3.8 sets forth a true and correct list of (i) the Real
Property owned, operated, managed, leased or otherwise occupied or possessed by
any GMC Company (collectively, the "GMC Real Property"); (ii) all material
Contracts under which any GMC Company is lessor, lessee, sublessor or sublessee
of any Real Property; (iii) all options held or given by any GMC Company
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and all Obligations on the part of any GMC Company, to sell, purchase or acquire
any interest in Real Property; and (iv) all material Contracts securing or
secured by any of the Real Property owned by any GMC Company, including, without
limitation, all mortgages, security agreements, notes or other obligations.
(b) (i) Except as set forth in Schedule 3.8, each of the GMC Companies
has good and marketable title, insurable as such by a reputable title insurance
company doing business in the applicable jurisdiction at regular rates, to each
parcel of Real Property owned by it, free and clear of all mortgages, pledges,
liens, encumbrances and security interests, except (A) those reflected or
reserved against in GMC's Financial Statements, (B) taxes and general and
special assessments not in default and payable without penalty or interest, (C)
Permitted Liens (as hereinafter defined), and (D) other liens, mortgages,
pledges, encumbrances and security interests which are not material to any
Facility or to any other material property.
(ii) "Permitted Liens" shall mean (A) any Encumbrances disclosed
on the GMC's Financial Statements or on Schedule 3.8, (B) liens for Taxes,
assessments or charges of any governmental authority which are not yet due and
payable or which are being contested by any of the GMC Companies in good faith,
(C) mechanics', carriers', workmen's, repairmen's or other like liens arising or
incurred in the ordinary course of business, (D) liens arising under original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business, (E) easements
(including, without limitation, reciprocal easement agreements and utility
agreements), zoning and subdivision requirements, rights of way, covenants,
consents, agreements, reservations, encroachments, variances, special
exceptions, non-conforming uses and other similar restrictions, charges or
encumbrances (whether or not recorded) that do not, individually or in the
aggregate, materially impair the continued use and operation of the GMC Real
Property to which they relate in the business of the GMC Companies as presently
conducted, (F) liens created by or existing from any litigation or legal
proceeding that are being contested by any of the GMC Companies in good faith or
which are otherwise disclosed or referred to in Schedule 3.16, and (G)
extensions, renewals or replacements of any lien for money borrowed by the GMC
Companies identified in Schedule 3.8.
(iii) The GMC Companies have no actual knowledge of claims of
defects of title to GMC Real Property that would materially adversely affect the
operations of any individual Facility or other material property.
(c) Except as set forth on Schedule 3.8, there are no material
violations of applicable Law or breaches of the terms of any material Contract
affecting the GMC Real Property.
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(d) The GMC Companies have made available to Acquiror all of the files
relating to the GMC Real Property. No condemnation Proceeding is pending or, to
the best Knowledge and belief of the GMC Companies, threatened, against any GMC
Real Property. No material uninsured casualty has occurred at any GMC Real
Property within the last twelve months.
(e) Environmental Matters.
(1) To the Knowledge of the GMC Companies, the GMC Companies have
complied with applicable Environmental Laws except for such failures to comply
which would not have, and would not reasonably be expected to have, a Material
Adverse Effect.
(2) None of the GMC Companies has received any written notice of
any citation, summons, order, complaint, penalty, investigation or review by any
governmental entity or other Person (a) with respect to any alleged violation by
any GMC Company of any Environmental Law, or (b) with respect to any alleged
failure by any GMC Company to have any environmental Permit or Consent required
in connection with its business or (c) with respect to any generation,
treatment, storage, recycling, transportation or disposal ("Management") of any
Hazardous Substance, except for such violations, failures of management which
would not, and would not reasonably be expected to, have a Material Adverse
Effect.
(3) To the Knowledge of the GMC Companies, no GMC Company has
received any written request for information, notice of claim, demand or
notification that it is or may be potentially responsible with respect to any
investigation or clean-up of any threatened or actual release of any Hazardous
Substance or any claim for material damages to persons or property.
(4) To the Knowledge of the GMC Companies, there are no
environmental liens on any properties owned or leased by any GMC Company and no
governmental actions have been taken which would subject any of such properties
to such liens.
(5) To the Knowledge of the GMC Companies, no Hazardous Substance
has been emitted, discharged, disposed of, deposited, or otherwise released by
the GMC Companies and, to the knowledge of the GMC Companies, there is no threat
of release by the GMC Companies, in, on, under or from any GMC Real Property (as
hereafter defined) (including but not limited to any surface or subsurface
waters on or flowing through any GMC Real Property) except for such emissions,
discharges, disposals, deposits or releases which would not, and would not
reasonably be expected to, have a Material Adverse Effect.
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(6) To the Knowledge of the GMC Companies, no underground storage
tank located on or under any GMC Real Property, and the piping appurtenant
thereto, will result in any material Obligation to the GMC Companies.
(7) To the Knowledge of the GMC Companies, no GMC Real Property
is or has ever been listed in the EPA's National Priorities List or in any other
list, schedule, log, inventory or record, however defined, maintained by any
governmental agency with respect to sites where Hazardous Substances have or may
have been disposed of or where there is, has been or may be a release or threat
of a release of any Hazardous Substance and no off-site waste storage, treatment
or disposal location to which any of the GMC Companies' wastes have been taken,
appears or has appeared on any such list.
(8) For purposes of this Section 3.8(e), the term "GMC Real
Property" shall also mean and include all facilities and properties now or
previously owned, operated, managed, leased or otherwise occupied or possessed
by any GMC Company.
3.9 Obligations. None of the GMC Companies has any material Obligations
other than (i) Obligations reflected on the consolidated balance sheet of GMC
and the GMC Subsidiaries as of April 30, 1996 (the "April 1996 Balance Sheet"),
(ii) Obligations set forth in Schedule 3.9, (iii) Obligations under Contracts of
the type listed or not required to be listed on Schedule 3.8 or Schedule 3.11
provided that no such Obligation consisted of or resulted from a material
default under or violation of any such Contract, and (iv) Obligations incurred
since April 30, 1996 and not in breach in any material respect of any of the
representations and warranties made in Section 3.10 or the covenants of Section
6.1. Except as set forth in Schedule 3.9 and except to the extent specifically
reflected or reserved against in the Financial Statements, no GMC Company is
directly or indirectly liable, by guarantee or otherwise, upon or with respect
to, or obligated to guarantee or assume, any material Obligation of any Person,
except endorsements made in the ordinary course of business in connection with
the deposit of items for collection. Except as described on Schedule 3.9, no
material Obligations of any of the GMC Companies are guaranteed by any Person
other than another GMC Company.
3.10 Operations Since April 30, 1996. Except as disclosed on Schedule 3.10,
since April 30, 1996, through the date of this Agreement the GMC Companies have
conducted their Businesses in the ordinary course consistent with past practices
and:
(a) Except in the ordinary course of its business consistent with its
past practices, none of the GMC Companies has (i) created or assumed any
material Encumbrance upon any of its businesses or Assets, (ii) incurred any
material
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Obligation, (iii) made any material loan or advance, (iv) assumed, guaranteed or
otherwise become liable for any material Obligation of any Person, (v) committed
for any material capital expenditure, (vi) sold, abandoned or otherwise disposed
of any of its material Assets, (vii) waived any material right or canceled any
debt or claim, (viii) assumed or entered into any material Contract other than
this Agreement and any other Contract contemplated herein, (ix) increased, or
authorized an increase in, the compensation or benefits paid or provided to any
of its directors, officers, employees, agents or representatives, (x) directly
or indirectly redeemed or acquired any of GMC's Stock or any other securities of
GMC, or (xi) declared, paid or set aside for payment any dividend or other
distribution.
(b) None of the GMC Companies has borrowed or lent any funds, leased
any equipment or Real Property, involving individually an amount exceeding
$250,000 for any one transaction or series of related transactions.
(c) There has been no Material Adverse Change.
3.11 Contracts.
(a) Set forth on Schedule 3.11 or in the list of material contracts of
GMC set forth in GMC's Annual Report on Form 10-K for the fiscal year ended May
31, 1995 is a true and correct list of all material Contracts to which any GMC
Company or the Assets of any GMC Company is bound or subject. None of the GMC
Companies is a party to or bound by (i) joint venture Contracts relating to the
Assets or Businesses of any GMC Company or by or to which any GMC Company or its
Assets are bound or subject or (ii) Contracts which limit, restrict or prohibit
the right of any GMC Company to conduct any business or to compete with any
other Person.
(b) True and correct copies of all such written Contracts have been
made available to Acquiror. Schedule 3.8 and Schedule 3.11 include a complete
and accurate description in all material respects of all oral Contracts meeting
the criteria set forth in subsection (a) above. All of the Contracts set forth
on Schedule 3.8 and Schedule 3.11 or referred to in this Agreement or in the
other Schedules hereto are in full force and effect and no GMC Company party
thereto is in material default thereunder nor, to the Knowledge of the GMC
Companies, is any other party to any such Contract in material default
thereunder.
3.12 Intangibles. Except as described in Schedule 3.12, each GMC Company
has good and valid title to, or license to use, all of its respective material
Intangibles, free and clear of any Encumbrances and maintains or has access to
all source code listings for all material Software owned or licensed by any GMC
Company. To the Knowledge of the GMC Companies, none of the GMC Companies'
Intangibles or its past or current uses, has violated or infringed upon or is
violating or infringing upon any
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Intangible of any Person, and no Person is violating or infringing upon any of
the GMC Companies' Intangibles, except in any such case which would not, and
would not reasonably be expected to, have a Material Adverse Effect. Except as
described in Schedule 3.12, none of the material GMC Companies' Intangibles is
owned by or registered in the name of any current or former stockholder,
director, officer, employee, salesman, agent, representative or contractor of
any of the GMC Companies, nor does any such Person have any interest therein or
right thereto. Except as described on Schedule 3.12, no GMC Company has licensed
any Person to use any Intangibles of any GMC Company, nor is any GMC Company
obligated to pay any material royalties, licensing fees or similar payments to
any Person.
3.13 Employee Benefit Plans. Except as set forth in Schedule 3.13, no GMC
Company has established, maintained or contributed to any Employee Benefit Plans
and no GMC Company has proposed any Employee Benefit Plans which any GMC Company
will establish or maintain, or to which any GMC Company will contribute, and,
except as provided in this Agreement, no GMC Company has proposed any material
changes to any Employee Benefit Plans now in effect (all of the preceding
referred to collectively hereinafter as "GMC's Employee Benefit Plans"). True
and correct copies and summaries and/or descriptions thereof of all of GMC's
Employee Benefit Plans have been provided to Acquiror. If permitted and/or
required by applicable Law, the GMC Companies have properly submitted or intend
to submit all of GMC's Employee Benefit Plans in good faith to meet the
applicable requirements of ERISA and/or the Code to the IRS for its approval
within the time prescribed therefor under applicable federal regulations. To the
Knowledge of the GMC Companies, favorable letters of determination of such
tax-qualified status of Employee Benefit Plans have been received from the IRS.
GMC has made available a true and correct copy of the most current Form 5500 and
any other form or filing required to be submitted to any governmental agency
with regard to any of GMC's Employee Benefit Plans. To the Knowledge of the GMC
Companies, all of GMC's Employee Benefit Plans are, and have been, operated in
substantial compliance with their provisions and with all applicable Laws
including, without limitation, ERISA and the Code and the regulations and
rulings thereunder. Other than any defined benefit pension set forth in the
employment arrangement of Esther Ponnocks, none of the GMC Companies has
established, maintained, contributed to or has any Obligations under any defined
benefit plan or Multiemployer Plan (as defined in ERISA or the Code). To the
Knowledge of the GMC Companies, there are no pending or threatened Proceedings
which have been asserted or instituted against any of GMC's Employee Benefit
Plans, the Assets of any of the trusts under such plans, the plan sponsor, the
plan administrator or against any fiduciary of any of GMC's Employee Benefit
Plans (other than routine benefit claims) nor does any GMC Company have
Knowledge of facts which could form the basis for any such Proceeding. There are
no investigations or audits of any of GMC's Employee Benefit Plans, any trusts
under
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such plans, the plan sponsor, the plan administrator or any fiduciary of any of
GMC's Employee Benefit Plans which have been threatened or instituted nor does
any GMC Company have Knowledge of facts which could form the basis for any such
investigation or audit. Except as disclosed in Schedule 3.13 or as contemplated
by this Agreement, no event has occurred which will result in any material
Obligation of any GMC Company in connection with any Employee Benefit Plan
established, maintained, or contributed to (currently or previously) by any GMC
Company or by any other entity which, together with such GMC Company, constitute
elements of either (i) a controlled group of corporations (within the meaning of
Section 414(b) of the Code), (ii) a group of trades or businesses under common
control (within the meaning of Sections 414(c) of the Code or 4001 of ERISA),
(iii) an affiliated service group (within the meaning of Section 414(m) of the
Code), or (iv) another arrangement covered by Section 414(o) of the Code.
3.14 Labor Matters. Except as set forth in Schedule 3.14, no GMC Company is
a party to any collective bargaining agreement or any other Contract with any
labor unions or any other representatives of any employee of any GMC Company.
Except as set forth in Schedule 3.14, no collective bargaining agreement is
currently being negotiated by or on behalf of any GMC Company. Except as
described on Schedule 3.14, there is no present or, to the Knowledge of the GMC
Companies, threatened walk-out or strike or any pending arbitration, unfair
labor practice, or other similar Proceeding with respect to any GMC Company or
its employees and there has been no such walk-out, strike, similar Proceeding or
litigation for the past eighteen months or which remains unresolved on the date
hereof. Except as set forth on Schedule 3.14, to the Knowledge of the GMC
Companies, during the past five years, or, if shorter, during the period of time
that GMC owned, directly or indirectly, any GMC Company, no union attempts to
organize or represent the employees of any GMC Company have been made, nor has
any GMC Company been notified by any labor organization that it is soliciting or
intends to solicit its employees to select a bargaining agent. Each of the GMC
Companies are in compliance in all material respects with all Laws respecting
employment practices.
3.15 Taxes. Accurate and complete copies of all material federal, state,
local and foreign corporate income, excise, franchise, sales and other material
Tax returns and reports filed by any of the GMC Companies with respect to their
last five fiscal years have been made available to Acquiror. Except as described
on Schedule 3.15, (a) GMC and each of GMC's Subsidiaries have properly and
timely filed all Tax returns and reports required to be filed by them, all of
which were accurately prepared and completed; (b) GMC and each of GMC's
Subsidiaries have properly withheld from payments to its employees, agents,
representatives, contractors and suppliers all amounts required by Law to be
withheld; (c) GMC and each of GMC's Subsidiaries have paid all Taxes required to
be paid by them and have made adequate provision in GMC's Financial Statements
for
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Taxes not yet due and payable or Taxes which are being contested in good faith
by appropriate Proceedings diligently prosecuted; (d) no audit of any of the GMC
Companies by any governmental taxing authority is currently pending or, to the
Knowledge of the GMC Companies, threatened; (e) no notice of any Tax audit, or
of any Tax deficiency or adjustment, has been received by any of the GMC
Companies, and, to the Knowledge of the GMC Companies, there is no basis for any
Tax deficiency or adjustment to be assessed against any of the GMC Companies;
(f) there are no Contracts or waivers in effect that provide for an extension of
time for the assessment of any Tax against any of the GMC Companies; (g) there
are no federal Tax elections under any section (or predecessor section) of the
Code in effect with respect to any of the GMC Companies; and (h) none of the GMC
Companies is a party to, is bound by, or has any Obligation under any Tax
sharing agreement or similar Contract or arrangement excluding any such Contract
or arrangement to which only GMC Companies are parties or are bound. There is no
dispute or claim pending or, to the Knowledge of the GMC Companies, threatened
concerning any material Tax liability of any of the GMC Companies. None of the
GMC Companies has been a member of an affiliated group filing a consolidated
federal income tax return (other than the group the common parent of which is
GMC) or has any liability for the Taxes of any Person other than the GMC
Companies under Treas. Reg. Section 1.1502-6 or any similar provision of state,
local or foreign Law, as a transferee or successor, by contract or otherwise.
3.16 Proceedings and Judgments. Except as described on Schedule 3.16, (a)
except for workers' compensation claims and Proceedings for which damages of
less than $50,000 are claimed, there is no Proceeding pending or, to the
Knowledge of the GMC Companies, threatened against or relating to any of the GMC
Companies, any of its Businesses or Assets, which, if adversely determined,
would, or would reasonably be expected to, have a Material Adverse Effect, (b)
there are no outstanding Judgments against any of the GMC Companies or any of
its businesses or Assets or against any of its officers, directors or employees,
which would or would reasonably be expected to have a Material Adverse Effect.
As to each item described on Schedule 3.16, accurate and complete copies of all
relevant pleadings, judgments, orders and correspondence have been made
available to Acquiror. Summaries of all open workers' compensation claims have
been delivered to Acquiror.
3.17 Insurance. All Insurance Policies held by or on behalf of each GMC
Company insure against risks of the kind customarily insured against and in
amounts customarily carried by insureds similarly situated. All such Insurance
Policies are enforceable and in full force and effect. No GMC Company is in
default with respect to any provision contained in any such Insurance Policy in
a manner which could impair coverage thereunder in any material respect nor has
any GMC Company failed to give any material notice or present any material claim
under any such Insurance Policy in due and timely fashion. No GMC
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Company has received a notice of cancellation, non-renewal or audit of any such
Insurance Policy which has not or will not be cured on or before Closing Date.
3.18 Related Party Transactions. Except as disclosed in the SEC Documents,
there are no real estate leases, personal property leases, loans, guarantees, or
other material Contracts, arrangements or transactions of any nature between any
of the GMC Companies and any of stockholders, officers, directors or affiliates
(as such term is defined for the purpose of the Exchange Act) of any of any of
the GMC Companies (excluding oral Contracts for "at will" employment with such
persons in their capacities as employees), or between any of the GMC Companies
and any Person which is an affiliate or an immediate family member of any such
stockholder, officer, director or affiliate.
3.19 Questionable Payments. To the Knowledge of the GMC Companies, neither
any GMC Company, nor any of the current or former stockholders, directors,
officers, employees, agents or representatives of any GMC Company, directly or
indirectly, have (a) used any funds of any of the GMC Companies for any illegal
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (b) used any corporate funds of any of the GMC Companies for
any direct or indirect unlawful payments to any foreign or domestic government
officials or employees, (c) violated any provision of the Foreign Corrupt
Practices Act of 1977, (d) established or maintained any unlawful or unrecorded
fund of corporate monies or other assets of the GMC Companies, (e) made any
false or fictitious entries on the books and records of any of the GMC
Companies, (f) made on behalf of any GMC Company or received any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment of any nature
other than third party payments subsequently revised, adjusted or disallowed on
routine Medicare, Medicaid or other third party audits, (g) offered, paid,
submitted for payment, solicited or received any remuneration in violation of
Medicare or Title XIX of the Social Security Act ("Medicaid"), including without
limitation, the Medicare and Medicaid Patient and Program Protection Act of
1987, the Medicare and Medicaid Anti-Kickback Act, the Federal False Claims Act
and Federal Laws limiting certain physician referrals (the "Stark Laws"), or (h)
made any material favor or gift which is not deductible for federal income tax
purposes using funds of any of the GMC Companies (collectively a "Questionable
Payment").
3.20 Suppliers and Customers. Set forth on Schedule 3.20 is a list of each
single customer or supplier which provides more than five percent (5%) of the
sales or purchases of the GMC Companies (each, a "material customer or
supplier"). The relationships of the GMC Companies with its material customers
or suppliers are good commercial working relationships. Except as described on
Schedule 3.20, during the last 12 months, no material customer or supplier has
canceled or otherwise terminated, or threatened in writing to cancel or
otherwise
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terminate, its relationship with any GMC Company or has during the last 12
months decreased materially, or threatened to decrease or limit materially, its
services, supplies or materials to any GMC Company or its usage of the services
or products of any GMC Company. No GMC Company has any Knowledge (a) that any
material customer or supplier intends to cancel or otherwise modify its
relationship with any GMC Company in any material respect or to decrease
materially or limit its services, supplies or materials to any GMC Company or
its usage of the services or products of any GMC Company or (c) that the
consummation of the transactions contemplated by this Agreement will adversely
affect in any material respect the relationship with any such material customer
or supplier.
3.21 Brokerage Fees. Except as described on Schedule 3.21, no broker,
finder, agent or similar intermediary has acted for or on behalf of any GMC
Company in connection with this Agreement or the transactions contemplated
hereby, and no broker, finder, agent or similar intermediary is entitled to any
broker's fee, finder's fee, or similar fee or commission in connection therewith
based on any agreement, arrangement or understanding with any GMC Company or any
action taken by or on behalf of any GMC Company.
3.22 Potential Conflicts of Interest. To the Knowledge of the GMC
Companies, no physician or "family member" has a "financial interest" in any GMC
Company (as such terms are defined in 42 U.S.C. ss.1395 nn and implementing
regulations) other than holdings of GMC Common Stock purchased or received in
the ordinary course.
3.23 Third Party Payment Contracts. In addition to the Permits to provide
services under the Medicare, Pennsylvania and New Jersey Medicaid Programs and
other programs specified in Section 3.4, each GMC Company, each Facility and
each Business conducted by a GMC Company, where appropriate, is an approved
provider of services in the third party payment programs identified in Schedule
3.23(a), including without limitation: (a) Pennsylvania and New Jersey Blue
Cross, Pennsylvania and New Jersey Blue Shield; and (b) other payor plans.
Except as set forth on Schedule 3.23(c), no action is pending, or to the
Knowledge of the GMC Companies threatened, to suspend, limit, terminate, fail to
renew or revoke the status of any such GMC Company, Facility or Business as a
provider in any such program, and no such GMC Company, Facility or Business has
been provided notice by any such third-party payor of its intention to suspend,
limit, terminate, revoke or fail to renew any contractual arrangement with such
GMC Company, Facility or Business as a participating provider of services. No
known and unresolved allegations have been made regarding the conduct of any GMC
Company, Facility or Business, which if true, would likely result in a
suspension, limitation, termination or failure to renew any contractual
arrangement between any such third party payor and any such GMC Company,
Facility or Business. Except as set forth
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on Schedule 3.23(d), since May 31, 1991, no GMC Company, Business or Facility
has ever been denied, disapproved or prohibited from participating in any
payment plan or payor program and no GMC Company, Business or Facility has ever
not applied for participation in a payment plan or payor program because it
believed it would not be accepted for participation or to receive payment.
3.24 Third Party Payment Filings. To the extent required for the conduct of
its respective Businesses and to receive payment for all services rendered, each
GMC Company has filed within the required time substantially all claims required
to be filed to secure payment under the Medicare, Medical Assistance, Blue Cross
and other third-party payment programs. At the time of filing, all such claims
were and continue to be true and accurate.
3.25 No Criminal Proceedings. Except as described in Schedule 3.25, there
are no pending or, to the Knowledge of the GMC Companies, threatened actions,
charges, indictments, information, or investigation of any GMC Company or of any
of their agents, officers or employees which involve allegations of criminal
violations of any Law, including without limitation, Medicare or Medicaid.
3.26 SEC Documents. GMC has filed all registration statements, proxy
statements, reports and other filings, including, without limitation, (i) its
Annual Reports on Form 10-K for the fiscal years ended May 31, 1993, 1994 and
1995, respectively, (ii) its Quarterly Reports on Form 10-Q for the periods
ended August 31, 1995, November 30, 1995 and February 29, 1996, (iii) all proxy
statements relating to meetings of GMC's stockholders (whether annual or
special) held since May 31, 1993, (iv) all other forms, reports and registration
statements and, in each case, all amendments thereto required to be made, which
it was required to file with the SEC (collectively, "SEC Documents"). True and
correct copies of all SEC Documents filed by or on behalf of GMC since June 1,
1993 have been made available to Acquiror. Except as set forth on Schedule 3.26,
all SEC Documents were prepared in all material respects in accordance with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations thereunder, and, as of its date of filing, none of such documents
contained any untrue statement of material fact, or omitted any material fact
required to be stated therein or necessary to make the statements therein not
misleading. GMC has heretofore furnished to Acquiror complete and correct copies
of all amendments and modifications that have not been filed by GMC with the SEC
to all Contracts, documents and other instruments that previously had been filed
by GMC with the SEC and are currently in effect. No GMC Company (other than GMC)
is required to file any form, report or other document with the SEC.
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3.27 Absence of Anti-Takeover Plans. Neither GMC nor any GMC Subsidiary has
in effect any plan, scheme, device or arrangement commonly or colloquially known
as a "poison pill" or "anti-takeover" plan or any similar plan, scheme, device
or arrangement other than provisions providing for a staggered Board of
Directors.
3.28 Information Supplied. At the date the Proxy Statement is first mailed
to GMC's stockholders or at the time of the meeting of GMC's stockholders held
to vote on approval and adoption of this Agreement, none of the information
contained or incorporated by reference in the Proxy Statement shall contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation or warranty is made by GMC with respect to statements
made or incorporated by reference therein based on information supplied by
Acquiror or Newco specifically for inclusion or incorporation by reference
therein. The Proxy Statement shall comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by GMC with
respect to statements made or incorporated by reference therein based on
information supplied by Acquiror or Newco specifically for inclusion or
incorporation by reference therein.
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SECTION 4: REPRESENTATIONS OF ACQUIROR AND NEWCO
Acquiror and Newco, jointly and severally, represent and warrant to GMC as
follows:
4.1 Organization. Acquiror is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania. Newco is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Acquiror and
Newco has full corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby upon the terms and conditions
herein provided. Acquiror owns directly or indirectly all of the outstanding
capital stock of Newco.
4.2 Authorization of Agreement. The execution, delivery, and performance of
this Agreement by Acquiror and Newco, and the consummation by Acquiror and Newco
of the transactions contemplated hereby, (a) have been authorized by all
necessary corporate actions by Acquiror's and Newco's respective boards of
directors, (b) do not constitute a violation of or default under (either
immediately or upon notice, lapse of time or both) (i) the charter or bylaws of
Acquiror or Newco, (ii) any material Permits held by Acquiror or Newco or (iii)
any material Contract to which Acquiror or Newco is a party or by which Acquiror
or Newco is bound, (c) do not constitute a violation of any Law or Judgment
which is applicable to Acquiror or Newco, the violation of which would, or would
reasonably be expected to, have a material adverse effect on Acquiror and its
Subsidiaries taken as a whole, (d) do not accelerate or otherwise modify, or
give any Person the right to accelerate or modify, any material Obligation of
Acquiror or Newco, and (e) do not require the Consent of any Person to be
obtained by Acquiror or Newco except for (i) the filing with the SEC of such
reports under Section 13(a) of the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement, (ii)
filings and approvals under the Hart-Scott-Rodino Act, and (iii) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware.
This Agreement constitutes the valid and legally binding agreement of Acquiror
and Newco, enforceable against Acquiror and Newco in accordance with its terms
except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar Laws affecting creditors' rights generally and to general
principles of equity (whether considered in a proceeding in equity or at Law).
4.3 Proceedings. There are no Proceedings existing, and neither Acquiror
nor Newco has any Knowledge of any such Proceedings pending or threatened,
against Acquiror or Newco, which would prevent or impair Acquiror's or Newco's
ability to consummate the transactions contemplated herein.
4.4 Brokerage Fees. Except for Alex. Brown & Sons Incorporated, no broker,
finder, agent or similar intermediary
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has acted for or on behalf of Acquiror or Newco in connection with this
Agreement or the transactions contemplated hereby, and no broker, finder, agent
or similar intermediary is entitled to any broker's fee, finder's fee, or
similar fee or commission in connection therewith based on any agreement,
arrangement or understanding with Acquiror or Newco or any action taken by
Acquiror or Newco.
4.5 Financing. Acquiror has the ability to finance the payment of the
Merger Consideration with cash on hand or available under existing lines of
credit or credit facilities.
4.6 Information Supplied. At the date the Proxy Statement is first mailed
to GMC's stockholders or at the time of the meeting of GMC's stockholders held
to vote an approval and adoption of this Agreement, none of the information
supplied or to be supplied by Acquiror or Newco for inclusion or incorporation
by reference in the Proxy Statement shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
SECTION 5: APPROVAL OF STOCKHOLDERS
5.1 Stockholders Meeting. As soon as reasonably practicable after the date
of the Agreement, GMC shall duly call, give notice of, convene and hold a
meeting of the holders of the GMC Common Stock (the "Stockholders Meeting") for
the purpose of approving this Agreement and the transactions contemplated by
this Agreement. Subject to the fiduciary duties of the Board of Directors of GMC
to the Stockholders of GMC under applicable Law, as advised by counsel, the
Board of Directors of GMC shall recommend to its Stockholders that they approve
the Merger and the other transactions contemplated hereby and shall solicit
proxies from its Stockholders in favor of the Merger for use at the Stockholders
Meeting. Acquiror shall vote all shares of GMC Common Stock held by it in favor
of approval of the Merger. Acquiror shall take all actions necessary to obtain
the approval of Acquiror as the sole stockholder of Newco of this Agreement and
the transactions contemplated hereby.
5.2 Preparation of the Proxy Statement. As soon as reasonably practicable
after the date of this Agreement, GMC shall reasonably prepare and file a
preliminary Proxy Statement with the SEC and use commercially reasonable efforts
to respond to any comments of the SEC or its staff and to cause the Proxy
Statement to be mailed to GMC's stockholders as promptly as practicable after
responding to all such comments to the satisfaction of the staff. GMC shall give
Acquiror and Newco and their counsel the opportunity to review the Proxy
Statement prior to its being filed with the SEC and shall give Acquiror and
Newco and their counsel the opportunity to review all amendments and supplements
to the Proxy Statement and all responses to requests
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for additional information and replies to comments prior to their being filed
with, or sent to, the SEC. Acquiror and Newco shall reasonably cooperate in the
preparation of the Proxy Statement. GMC shall notify Acquiror promptly of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and shall supply Acquiror with copies of all correspondence between
GMC or any of its representatives, on the one hand, and the SEC or its staff, on
the other hand, with respect to the Proxy Statement or the Merger. If at any
time prior to the Stockholders Meeting there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, GMC shall
promptly prepare and mail to its stockholders such an amendment or supplement.
GMC shall not mail any Proxy Statement with respect to this Agreement and the
transactions contemplated hereby, or any amendment or supplement thereto, to
which Acquiror reasonably objects unless GMC is advised by its counsel that the
mailing of such Proxy Statement and any amendment or supplement thereto in the
form proposed by GMC is required by applicable Law.
SECTION 6: CERTAIN OBLIGATIONS OF GMC PENDING CLOSING
6.1 Conduct of GMC's Businesses. Between the date of this Agreement and the
Closing Date, except with the prior written consent of Acquiror:
(a) GMC shall, and shall cause each of the GMC Companies to, conduct
its businesses in a diligent manner consistent with past practices; GMC shall
not, and shall cause each of the GMC Companies not to, make any material change
in its business practices; and GMC shall, and shall cause each of the GMC
Companies to, in good faith, use commercially reasonable efforts to (i) preserve
its business organizations intact, (ii) keep available the services of its
current officers and key employees and (iii) maintain the good will of its
suppliers, customers and other Persons having business relations with any of the
GMC Companies. When requested by Acquiror, GMC and each of the GMC Companies
shall consult with Acquiror as to the management of GMC's and the GMC Companies'
respective Businesses, Facilities and affairs.
(b) Except in the ordinary course of its businesses consistent with
past practices, GMC shall not, and shall cause each of the GMC Companies not to,
(i) create or assume any material Encumbrance upon any of its businesses or
Assets, (ii) incur any Obligation, (iii) make any material loan or advance, (iv)
assume, guarantee or otherwise become liable for any material Obligation of any
Person, (v) commit for any material capital expenditure, (vi) lease, sell,
transfer, abandon or otherwise dispose of any of its material Assets, (vii)
waive any material right or cancel any debt or claim, (viii) assume or enter
into any Contract other than this Agreement (and any other Contract contemplated
herein), (ix) increase, or authorize an
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increase in, the compensation or benefits paid or provided to any of its
directors, officers, employees, agents or representatives, (x) directly or
indirectly acquire any GMC Common Stock or any other securities of GMC, or (xi)
declare, pay or set aside for payment any dividend or other distribution.
Notwithstanding the provisions of this Section 6.1, GMC may extend the term of
its existing line of credit agreement with Commerce Bank and increase such line
to an amount not to exceed $8,500,000.
(c) Even in the ordinary course of their businesses consistent with
past practices, GMC shall not, and shall cause each of the GMC Companies not to,
borrow or lend any funds, purchase any goods or services, lease any equipment,
incur any Obligation, or enter into any Contract (excluding customer Contracts,
working capital advances, sale of accounts receivable transactions, and related
commitments entered into in the ordinary course of business consistent with past
practices) or other transaction, or do any of the other things described in
paragraph (b) above involving individually an amount exceeding $250,000 for any
one transaction or series of related transactions. Acquiror shall not
unreasonably withhold its consent to any request for approval of any transaction
subject to this paragraph (c).
(d) GMC shall not, and shall cause each of the GMC Companies not to,
(i) adopt, sponsor or enter into any new Employee Benefit Plan or employment
agreement or modify any employment agreement or, except as required by
applicable Law, any existing Employee Benefit Plan, (ii) except as provided in
Section 6.5, participate in any merger, consolidation, division, or
reorganization (other than the Merger), (iii) engage in any new type of
business, (iv) acquire the business or any bulk Assets of any Person, (v)
completely or partially liquidate or dissolve, (vi) terminate any material part
of its Businesses, (vii) issue, sell, transfer, pledge, hypothecate or otherwise
encumber or dispose of any GMC Stock or any of the capital stock or other
securities of any GMC Subsidiary, (viii) except in consultation with and with
the prior written consent of Acquiror (which shall not be withheld
unreasonably), enter into or renew any union or collective bargaining agreement
or modify any existing union or collective bargaining agreement, or (ix) settle
or compromise any material Proceeding.
(e) GMC shall not, and shall not permit any of the GMC Companies to,
amend its charters or bylaws, partnership agreements or other organizational
documents, as applicable.
(f) GMC shall not, and shall cause each of the GMC Companies not to,
redeem, retire or purchase, or create, grant or issue any Contracts, options,
warrants or other rights with respect to, any GMC Stock or any of the capital
stock of any of the GMC Companies or any other securities of GMC or any of the
GMC Companies, or create, grant or issue any stock appreciation rights, phantom
shares, cash performance units or other similar
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rights. Without limiting the generality of the foregoing, GMC shall not issue,
or permit the further accrual of, any options or awards under the GMC Option
Plans, the LTIP or any employment agreement.
(g) Neither GMC nor any of its Subsidiaries shall enter into any
Contract which commits any of them to take any action or omit to take any action
which would be inconsistent with any of the provisions of this Section 6.1.
6.2 Access to Information. (a) Between the date of this Agreement and the
Closing Date, GMC shall, and shall cause each of the GMC Companies to (i) permit
Acquiror and its authorized representatives to have reasonable access to each of
the GMC Companies' facilities and offices during normal business hours, to
conduct such environmental studies as Acquiror shall reasonably deem necessary
or appropriate, to observe each of the GMC Companies' operations, to meet with
each of the GMC Companies' officers, employees, accountants, counsel, financial
advisors and other representatives, to contact each of the GMC Companies'
customers and suppliers and to audit, examine and copy each of the GMC
Companies' files, books, records and other documents and papers, and (ii)
provide to Acquiror and its authorized representatives all information
concerning each of the GMC Companies and its Businesses, Assets and financial
condition, which Acquiror reasonably requests. Acquiror shall pay its own
out-of-pocket costs and expenses with respect to any such investigation.
(b) GMC shall permit Acquiror and its representatives to make
reasonable investigations and inquiries concerning the status, scope and nature
of all Proceedings pending or threatened against any GMC Company, or which in
any way affect the Businesses of any GMC Company or their Assets. GMC shall, and
shall cause its representatives to, assist Acquiror and its representatives in
conducting such investigations and inquiries, including without limitation,
attending any meetings with government representatives. Without limiting the
generality of the foregoing, GMC expressly authorizes Acquiror and its
representatives to communicate directly with such government representatives.
Acquiror shall not institute any conversations or meetings with any governmental
representative (excluding conversations or meetings to obtain Permits in the
ordinary course) involving any GMC Company without first providing GMC with an
opportunity to initiate and participate in such conversations and meetings.
Acquiror shall not initiate or communicate directly with any government
representatives with respect to any criminal Proceeding involving any GMC
Company without the presence of a representative of GMC.
6.3 Compliance with ISRA. With respect to each GMC Real Property located in
the State of New Jersey, the GMC Companies shall comply with the terms and
conditions of the Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq.
("ISRA")
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and any and all regulations, orders or directives issued pursuant thereto and,
as a condition precedent to Acquiror's obligation to complete Closing, shall
obtain from the NJDEP, a letter of nonapplicability or written acceptance of a
Negative Declaration in accordance with Law and deliver such documents to
Acquiror no later than ten (10) days before Closing. Any filing fees,
professional fees and other expenses incurred by any of the GMC Companies in
complying with ISRA shall be the GMC Companies' sole responsibility, which
responsibility shall survive the Closing or termination of this Agreement.
6.4 Material Consents. Between the date of this Agreement and the Closing
Date, GMC and each of its Subsidiaries shall in good faith use commercially
reasonable efforts to (a) obtain all Consents required to be obtained by GMC of
all governmental regulatory authorities, lenders, lessors, vendors, customers,
and other Persons necessary to permit the Merger and other transactions
contemplated by this Agreement to be consummated without violating any Law to
which GMC or any of its Subsidiaries is bound, any Permit held by GMC or any of
its Subsidiaries or any loan agreement, lease or other material Contract to
which GMC or any of its Subsidiaries is a party or by which GMC or any of its
Subsidiaries is bound, (b) give the notices and make the filings described on
Schedule 3.2 and (c) request estoppel certificates from all lenders and lessors
as reasonably requested by Acquiror.
6.5 Acquisition Proposals. Neither GMC nor any GMC Company shall, directly
or indirectly, through any stockholder, officer, director, partner, employee,
agent, representative or otherwise, solicit, initiate or encourage the
submission of any proposal or offer (including, without limitation, any tender
offer) from any Person relating to any acquisition or purchase of all or (other
than in the ordinary course of business) any significant portion of the Assets
of, or any equity interest in, GMC or any GMC Company or any business
combination with GMC or any GMC Company (collectively, an "Acquisition
Proposal"), or participate in any negotiations regarding, or furnish to any
other Person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the foregoing. GMC immediately
shall cease and cause to be terminated all existing discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. GMC
shall notify Acquiror promptly if any such proposal or offer, or any inquiry or
contact with any Person with respect thereto, is made and shall, in any such
notice to Acquiror, indicate in reasonable detail the identity of the Person
making such proposal, offer, inquiry or contact and the material terms and
conditions of such proposal, offer, inquiry or contact. Notwithstanding the
foregoing, GMC may furnish information and access, or cause such information or
access to be furnished, in response to unsolicited requests therefor, to any
Person or group (each a "Potential Acquiror"),
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including parties with whom GMC or its representatives have had discussions on
any basis prior to the date hereof, pursuant to appropriate confidentiality
agreements, and may (cause its representatives to) participate in discussion and
negotiate with such Potential Acquirors concerning any Acquisition Proposal only
if (i) the Potential Acquiror has, in circumstances not involving any prior
breach by GMC of any of the foregoing provisions, made a bona fide Acquisition
Proposal, and (ii) the Board of Directors of GMC determines in its good faith
judgment in the exercise of its fiduciary duties to the stockholders of GMC
under applicable state Law based upon the advice of its legal counsel and after
consultation with its financial advisors, that such action is required by such
fiduciary duties. In the event GMC shall take any action pursuant to the
foregoing sentence, it shall promptly inform Acquiror as to that fact and shall
furnish to Acquiror the specifics thereof. GMC may not enter into a definitive
agreement for an Acquisition Proposal with a Potential Acquiror with which it is
permitted to negotiate pursuant to this Section except as provided in Section
11.1(e). Nothing contained in this Agreement shall prohibit GMC and its
directors from (a) issuing a press release or otherwise publicly disclosing the
terms of any Acquisition Proposal, if required by applicable Law, (b) making to
its stockholders any recommendation and related filings with the SEC as required
by Rules 14e-2 and 14d-9 under the Exchange Act with respect to any tender offer
or (c) making any disclosure to GMC's stockholders which the Board of Directors
of GMC determines, after consultation with outside counsel, is required under
applicable Law (including, without limitation, Laws relating to the fiduciary
duties of directors).
6.6 Hart-Scott-Rodino Filings. As promptly as practicable after the date of
this Agreement, GMC shall make all filings under the Hart-Scott-Rodino Act which
are required in connection with the transactions contemplated by this Agreement.
GMC shall cooperate with Acquiror in connection with Acquiror's filings under
the Hart-Scott-Rodino Act including, without limitation, providing all
information reasonably requested by Acquiror and taking all reasonable actions
to cause the early termination of all applicable waiting periods.
6.7 Reports. GMC shall provide Acquiror with GMC's Financial Statements for
the year ended May 31, 1996 and any interim period thereafter as and when such
Financial Statements are completed. As of its date, none of such documents will
contain any untrue statement of material fact or omit any material fact required
to be stated therein or necessary to make the statements therein not misleading.
6.8 Advice of Changes. Between the date of this Agreement and the Closing
Date, GMC shall promptly advise Acquiror of any fact of which it obtains
Knowledge and which, if existing or known as of the date of this Agreement,
would have been required to be set forth or disclosed in or pursuant to this
Agreement (it being understood that such advice shall not be
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deemed to modify GMC's representations, warranties or covenants contained in
this Agreement).
6.9 Reasonable Efforts. Subject to the fiduciary duties of the Board of
Director's of GMC to GMC's Stockholders under applicable Laws as advised by
counsel, GMC shall use all reasonable efforts, and cause each GMC Company to use
all reasonable efforts, to consummate the Merger and the transactions
contemplated by this Agreement as of the earliest practicable date including,
without limitation, causing the conditions set forth in Section 9 to be
satisfied, and GMC shall not take, cause or, to the best of its reasonable
ability permit to be taken, and shall not permit or cause any GMC Company to
take, cause or permit to be taken, any action that would impair the prospect of
completing the Merger and the transactions contemplated by this Agreement.
SECTION 7: CERTAIN OBLIGATIONS OF ACQUIROR PENDING CLOSING
7.1 Hart-Scott-Rodino Filings. As promptly as practicable after the date of
this Agreement, Acquiror shall make all filings under the Hart-Scott-Rodino Act
which are required in connection with the transactions contemplated by this
Agreement. Acquiror shall cooperate with GMC in connection with GMC's filings
under the Hart-Scott-Rodino Act, including without limitation, providing all
information reasonably requested by GMC and taking all reasonable actions to
cause the early termination of all applicable waiting periods.
7.2 Advice of Changes. Between the date of this Agreement and the Closing
Date, Acquiror shall promptly advise GMC in writing of any fact of which it
obtains Knowledge and which, if existing or known as of the date of this
Agreement, would have been required to be set forth or disclosed in or pursuant
to this Agreement (it being understood that such advice shall not be deemed to
modify Acquiror's representations, warranties or covenants contained in this
Agreement).
7.3 Reasonable Efforts. Acquiror and Newco shall use all reasonable efforts
to consummate the Merger and the transactions contemplated by this Agreement as
of the earliest practicable date including, without limitation, causing the
conditions set forth in Section 8 to be satisfied, and neither Acquiror nor
Newco shall take, or cause or to the best of its reasonable ability permit to be
taken, any action that would impair the prospect of completing the Merger and
the transactions contemplated by this Agreement.
7.4 Material Consent and Permits. Between the date of this Agreement and
the Closing Date, Acquiror and Newco shall in good faith cooperate with GMC in
its efforts to obtain the Consents and Permits referenced in Section 6.4,
provided, however, that neither Acquiror nor Newco shall (i) be required to
assume, guaranty or act as surety for the Obligation of any
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Person, (ii) breach or violate any Contract to which Acquiror, Newco or any of
their respective Subsidiaries is a party or by which any of them are bound or
(iii) consent to the amendment of any Contract or Permit which Acquiror
determines in its sole discretion would be adverse to the GMC Companies or the
Acquiror.
SECTION 8: CONDITIONS PRECEDENT TO GMC'S CLOSING OBLIGATIONS
Each obligation of GMC to be performed on the Closing Date shall be subject
to the satisfaction of each of the conditions stated in this Section 8, except
to the extent that such satisfaction is waived by GMC in writing.
8.1 Stockholder Approval. The Merger shall have been duly approved by the
affirmative vote of the holders of a majority of the outstanding shares of GMC
Common Stock in accordance with Section 251 of the DGCL.
8.2 Acquiror's and Newco's Representations. Each representation and
warranty made by Acquiror and Newco in this Agreement shall be true and correct
(a) in all material respects with respect to representations and warranties
which are not modified by materiality and (b) in all respects with respect to
representations and warranties which are modified by materiality, in either
case, on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date except for those representations and
warranties made as of a specified date which shall continue to be true and
correct as of such date.
8.3 Acquiror's and Newco's Performance. All of the terms and conditions of
this Agreement to be satisfied or performed by Acquiror or Newco on or before
the Closing Date shall have been satisfied or performed in all material
respects.
8.4 Closing Documents. Acquiror and Newco shall have delivered all of the
documents provided for in Section 10.2.
8.5 Hart-Scott-Rodino Waiting Periods. All applicable waiting periods with
respect to the Merger under the Hart-Scott-Rodino Act shall have expired.
8.6 Legal Opinion. Newco shall have received the favorable opinion of Blank
Rome Comisky & McCauley, counsel to Acquiror, dated the Closing Date, addressed
to GMC and in form and substance materially acceptable to the parties.
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SECTION 9: CONDITIONS PRECEDENT TO ACQUIROR'S CLOSING OBLIGATIONS
Each obligation of Acquiror to be performed on the Closing Date shall be
subject to the satisfaction of each of the conditions stated in this Section 9,
except to the extent that such satisfaction is waived by Acquiror in writing.
9.1 Material Consents and Permits. On or before the Closing Date, GMC,
Acquiror and/or Newco shall have received all Consents and Permits necessary to
permit the Merger and the other transactions contemplated by this Agreement to
be consummated. All such Consents and Permits shall be in form and substance
reasonably satisfactory to Acquiror and all applicable notice periods shall have
expired.
9.2 Stockholder Approval. The Merger shall have been duly approved by the
affirmative vote of the holders of a majority of the outstanding shares of GMC
Common Stock in accordance with Section 251 of the DGCL.
9.3 GMC's Representations. Each representation and warranty made by GMC in
this Agreement shall be true and correct (a) in all material respects with
respect to representations and warranties which are not modified by materiality
(excluding the representations and warranties set forth in the first two
sentences of Section 3.5) and (b) in all respects with respect to
representations and warranties which are set forth in the first two sentences of
Section 3.5 or which are modified by materiality, in any case, as of the date of
this Agreement, and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date except for those representations and
warranties made as of a specified date which shall continue to be true and
correct as of such date.
9.4 GMC's Performance. All of the terms and conditions of this Agreement to
be satisfied or performed by GMC on or before the Closing Date shall have been
satisfied or performed in all material respects.
9.5 Closing Documents. GMC shall have delivered all of the documents
provided for in Section 10.1.
9.6 Absence of Proceedings. No Proceeding shall have been instituted
(excluding any such action, suit or proceeding initiated by or on behalf of
Acquiror or any of its Subsidiaries or affiliates), no Judgment or order shall
have been issued, and no new Law shall have been enacted, on or before the
Closing Date, in any event which seeks damages which would or would be
reasonably expected to result in a Material Adverse Effect as a result of, or
which seeks to or does prohibit or restrain, the consummation of the Merger or
any of the other transactions contemplated by this Agreement.
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9.7 No Material Adverse Changes. There shall not have been any Material
Adverse Change, or any event or omission that is reasonably likely to have a
Material Adverse Effect, between April 30, 1996 and the Closing Date.
9.8 Hart-Scott-Rodino Waiting Periods. All applicable waiting periods with
respect to the Merger under the Hart-Scott-Rodino Act shall have expired.
9.9 Legal Opinion. Acquiror shall have received the favorable opinions of
Mesirov Gelman Jaffe Cramer & Jamieson, counsel to GMC, and Buchanan &
Ingersoll, regulatory counsel to GMC, each dated the Closing Date, addressed to
Acquiror and in form and substance mutually acceptable to the parties.
SECTION 10: CLOSING DELIVERIES
10.1 GMC's Obligations at Closing. GMC shall deliver to Acquiror, at the
Closing, the following:
(a) Resignations of all directors of GMC, releases (in form and
substance reasonably satisfactory to the parties) and, if requested by Acquiror,
resignations of any and all officers or directors, as such, of the GMC
Companies, in form and substance satisfactory to Acquiror, dated the Closing
Date and duly executed by each such director and officer.
(b) A certificate dated the Closing Date, in form and substance
satisfactory to Acquiror, of the Chief Executive Officer and the Chief Financial
Officer of GMC, certifying that to the actual Knowledge of such officer after
reasonable inquiry (i) all representations and warranties made by GMC in this
Agreement are true and correct as required by Section 9.3, (ii) all of the terms
and conditions of this Agreement to be satisfied or performed by GMC on or
before the Closing Date have been satisfied or performed in all material
respects, and (iii) there has not been any Material Adverse Change between April
30, 1996 and the Closing Date.
(c) Good standing certificates for each GMC Company, dated no earlier
than ten days before the Closing Date, from its jurisdiction of formation and
each respective jurisdiction in which any of the GMC Companies currently or at
the Closing Date is qualified or registered to do business as a foreign
corporation or partnership.
(d) All other agreements, certificates, instruments and documents
reasonably requested by Acquiror in order to fully consummate the transactions
contemplated hereby and carry out the purposes and intent of this Agreement.
10.2 Acquiror's or Newco's Obligations at Closing. Acquiror or Newco shall
deliver to GMC at the Closing the following:
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(a) A certificate dated the Closing Date, in form and substance
satisfactory to GMC, of the Chief Executive Officer and the Chief Financial
Officer of each of Acquiror and Newco, certifying that to the actual Knowledge
of such officer after reasonable inquiry (i) all representations and warranties
made by Acquiror or Newco in this Agreement are true and correct to the extent
required by Section 8.2 and (ii) all of the terms and conditions of this
Agreement to be satisfied or performed by Acquiror or Newco on or before the
Closing Date have been satisfied or performed in all material respects.
(b) Good standing certificates for Acquiror and Newco dated no earlier
than ten days before the Closing Date, from its jurisdictions of incorporation.
(c) All other agreements, certificates, instruments and documents
reasonably requested by GMC in order to fully consummate the transactions
contemplated hereby and carry out the purposes and intent of this Agreement.
SECTION 11: TERMINATION
11.1 Termination. At any time prior to the Closing, whether or not the
Merger has been approved by the Stockholders, this Agreement may be terminated
and the transactions contemplated hereby may be abandoned, in accordance with
any of the following methods:
(a) by mutual consent of Acquiror, Newco and GMC, authorized by their
respective boards of directors;
(b) by Acquiror or GMC, as the case may be, (i) if the Closing shall
not have occurred on or prior to February 1, 1997 for any reason or (ii) if it
has become reasonably certain that any condition to the closing obligations of
such party will not be satisfied and such condition has not been waived by such
party, unless, in either case, the failure of the Closing to occur or such
condition to be satisfied shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe its agreements and conditions set
forth herein to be performed or observed by such party at or before the Closing;
(c) by Acquiror, if there shall have been material breach of any
obligation of GMC hereunder and such breach shall have not been remedied within
10 days after receipt by GMC of notice in writing from Acquiror specifying the
nature of such breach and requesting that it be remedied;
(d) by GMC, if there shall have been any material breach of any
obligation of Acquiror hereunder and such breach shall not have been remedied
within 10 days after receipt by Acquiror of notice in writing from GMC
specifying the nature of such breach and requesting that it be remedied;
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(e) by GMC in order to enter into a definitive agreement for an
Acquisition Proposal with a Potential Acquiror with which it is permitted to
negotiate pursuant to Section 6.5, provided that GMC shall have first (i) paid
the Termination Fee to Acquiror pursuant to Section 12.2 and (ii) given the
Acquiror at least three business days' notice of its intention to terminate this
Agreement, such notice to include all of the material terms of such definitive
agreement; and
(f) by Acquiror or Newco, if (i) the Board of Directors of GMC shall
withdraw, modify or change its recommendation of this Agreement or the Merger in
a manner adverse to Acquiror or Newco or shall have resolved to do any of the
foregoing or (ii) if the Board of Directors of GMC shall have recommended to the
shareholders of GMC an Acquisition Proposal.
11.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 11.1 hereof by Acquiror, on the one hand, or GMC,
on the other hand, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall become void and have no effect,
and no party shall have any further Obligation under this Agreement except as
provided in Section 12.1 or 12.2; provided, however, that termination of this
Agreement pursuant to Section 11.1 (b), (c) or (d), shall not relieve any party
to this Agreement of liability for any default or breach of this Agreement.
SECTION 12: OTHER PROVISIONS
12.1 Confidentiality and Publicity. Acquiror and Newco shall hold in
confidence all confidential information concerning the GMC Companies which is
disclosed to it in connection with the transactions contemplated hereby, and GMC
and each of the GMC Subsidiaries shall hold in confidence all confidential
information concerning Acquiror which is disclosed to them in connection with
the transactions contemplated hereby. GMC and Acquiror shall consult with each
other as to the form and substance of any press release or other public
disclosure of matters related to this Agreement and the transactions
contemplated hereby and thereby and neither party shall make any such press
release or other public disclosure without the consent of the other party, which
such consent shall not be unreasonably withheld or delayed; provided, however,
that nothing in this Section 12.1 shall be deemed to prohibit any party hereto
from making any disclosure which its counsel deems necessary or advisable in
order to fulfill such party's disclosure obligations imposed by Law. In the
event that the Merger is not consummated, each party shall promptly return to
the other party all confidential information concerning such other party
including copies thereof.
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12.2 Fees and Expenses. (a) Except as set forth in this Section 12.2,
Acquiror shall pay all of the fees and expenses incurred by it, and GMC shall
pay all of the fees and expenses incurred by GMC, in negotiating and preparing
this Agreement (and all other Contracts and documents executed in connection
herewith or therewith) and in consummating the transactions contemplated hereby
and thereby.
(b) The parties acknowledge that as a condition to its willingness to
enter into this Agreement, Acquiror has requested GMC to pay a termination fee
in the amount of $5,000,000 plus Expenses (as hereinafter defined) in an amount
not to exceed $750,000 (collectively, the "Termination Fee") in certain
circumstances. To induce Acquiror to enter into this Agreement, GMC agrees to
pay the Termination Fee to Acquiror, (i) as a precondition to GMC's right to
terminate this Agreement pursuant to Section 11.1(e) hereof, (ii) in the event
that Acquiror or Newco terminate this Agreement pursuant to Section 11.1(f), or
(iii) in the event that a Third Party Acquisition (as defined below) shall have
occurred at any time (A) this Agreement is in effect or (B) during the first 12
months immediately following the termination of this Agreement (other than a
Termination pursuant to Section 11.1(b) or (d) due to a breach of this Agreement
by Acquiror or Newco); provided that in the case of any Third Party Acquisition
under clause (B), such Third Party Acquisition is at a per share value (or
implied per share value) higher than $5.75 per share of GMC Common Stock.
(c) "Expenses" means the sum of all of Acquiror's and Newco's
accountable out-of-pocket expenses and fees incurred or accrued by either of
them or on their behalf in connection with the transactions contemplated hereby.
(d) "Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of GMC by merger, consolidation or other
business combination transaction by any Person other than Acquiror, Newco or any
affiliate thereof (a "Third Party"), or the public announcement of a Contract
providing for such a transaction; (ii) the acquisition by any Third Party of 50%
or more of the total assets of the GMC Companies, taken as a whole, or the
public announcement of a Contract providing for such a transaction; or (iii) the
acquisition by a Third Party of 50% or more of the outstanding GMC Stock whether
by tender offer, exchange offer or otherwise, or the public announcement of a
Contract providing for such a transaction.
(e) In the event that GMC shall fail to pay the Termination Fee when
due, there shall also be payable to the Acquiror the costs and expenses actually
incurred or accrued by Acquiror and Newco (including, without limitation, fees
and expenses of counsel) in connection with the collection under and enforcement
of this Section 12.2, together with interest on such unpaid Termination Fee and
expenses, commencing on the date that
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the Termination Fee became due, at a rate equal to the rate of interest publicly
announced by Mellon Bank, N.A., from time to time, as such bank's Base Rate.
(f) The Payment of the Termination Fee shall be due and payable by
GMC: (i) prior to the termination of this Agreement by GMC pursuant to Section
11.1(e) or (ii) within five business days following (A) the termination of this
Agreement pursuant to 11.1(f) or (B) the occurrence of any Third Party
Acquisition requiring the Termination Fee to be paid pursuant to Section
12.2(b).
(g) In addition to any other rights and remedies it may have at law or
in equity, Acquiror shall have the right to have an injunction, issued by any
court of equity having jurisdiction, enjoining the GMC Companies and any other
Person from entering into a definitive agreement for an Acquisition Proposal or
consummating a Third Party Acquisition until the Termination Fee has been paid
to Acquiror in full.
(h) In addition to any other rights and remedies it may have at law or
in equity, Acquiror and Newco shall be entitled to be reimbursed by GMC for
their Expenses in the event of, and payable within five business days after, any
termination of this Agreement by Acquiror pursuant to Section 11.1(b) or Section
11.1(c) due to a material breach of this Agreement by GMC.
12.3 Notices. All notices, consents or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given when (a) delivered personally, delivery charges
prepaid, or (b) three business days after being sent by registered or certified
mail (return receipt requested), postage prepaid, or (c) one business day after
being sent by a nationally recognized express courier service, postage or
delivery charges prepaid, in any case to the parties at its addresses stated on
the first page of this Agreement. Notices may also be given by prepaid telegram
or facsimile and shall be effective on the date transmitted if confirmed within
24 hours thereafter by a signed original sent in the manner provided in the
preceding sentence. A copy of each notice to GMC shall be simultaneously sent to
Mesirov Gelman Jaffe Cramer & Jamieson, 1735 Market Street, Philadelphia,
Pennsylvania 19103, Attention: Robert P. Krauss, Esquire. A copy of each notice
to Acquiror or Newco shall be sent to Blank Rome Comisky & McCauley, Four Penn
Center Plaza, Philadelphia, Pennsylvania 19103, Attention: Stephen E. Luongo,
Esquire. Any party may change its address for notice and the address to which
copies must be sent by giving notice of the new addresses to the other party in
accordance with this Section 12.3, provided that any such change of address
notice shall not be effective unless and until received.
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12.4 Survival of Representations. The respective representations,
warranties, and covenants of the parties in this Agreement shall not survive the
Closing Date and shall terminate on the Closing Date, except for the
representations, warranties and covenants contained in Sections 12.1, 12.2 and
12.13 which shall survive without limitation of time. However, such termination
shall not be deemed to deprive any of the parties hereto or their Subsidiaries,
or any of their directors, officers or controlling Persons, of any defense in
law or equity which otherwise would be available against the claims of any
Person, including, but not limited to, any stockholder or former stockholder of
the parties hereto. Before and on the Closing Date, each party shall be deemed
to have relied upon each of the representations and warranties made to it in
this Agreement or pursuant hereto, regardless of any investigation made by or on
behalf of such party or the right of investigation of such party.
12.5 Entire Understanding. This Agreement, together with the Exhibits and
Schedules hereto, and that certain Confidentiality Agreement dated February 3,
1995 between Acquiror and GMC, state the entire understanding among the parties
with respect to the subject matter hereof and thereof, and supersedes all prior
and contemporaneous oral and written communications and agreements with respect
to the subject matter hereof. No amendment or modification of this Agreement
shall be effective unless in writing and signed by the party against whom
enforcement is sought. Each of the parties may agree to any amendment or
supplement to this Agreement, or a waiver of any provision of this Agreement,
either before or after the approval of such party's stockholders (as provided in
this Agreement) and without seeking further stockholder approval, so long as
such amendment, supplement or waiver does not change the Merger Consideration.
This Agreement shall not be terminated except as provided in Section 11.1.
12.6 Parties in Interest. This Agreement shall bind, benefit, and be
enforceable by and against GMC, Acquiror and Newco and their respective
successors and assigns. No party shall in any manner assign any of its rights or
obligations under this Agreement without the express prior written consent of
the other parties. Nothing in this Agreement is intended to confer, or shall be
deemed to confer, any rights or remedies upon any Persons other than the parties
hereto.
12.7 No Waivers. No waiver with respect to this Agreement shall be
enforceable unless in writing and signed by the party against whom enforcement
is sought. Except as otherwise expressly provided herein, no failure to
exercise, delay in exercising, or single or partial exercise of any right, power
or remedy by any party, and no course of dealing between or among any of the
parties, shall constitute a waiver of, or shall preclude any other or further
exercise of, any right, power or remedy.
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12.8 Severability. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable as to any party or generally, then that
provision shall be enforceable by the other parties and the remaining provisions
hereof shall not be affected thereby and shall be enforceable without regard
thereto.
12.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.
12.10 Section Headings. Section and subsection headings in this Agreement
are for convenience of reference only, do not constitute a part of this
Agreement, and shall not affect its interpretation.
12.11 References. All words used in this Agreement shall be construed to be
of such number and gender as the context requires or permits.
12.12 Controlling Law. THIS AGREEMENT IS MADE UNDER, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
12.13 Directors' and Officers' Indemnification and Insurance.
(a) The charter or bylaws of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in the charter or bylaws of GMC, which provisions shall not be amended, repealed
or otherwise modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of individuals who at
the Effective Time were directors, officers, employees, fiduciaries or agents of
GMC, unless such modification shall be required by Law.
(b) GMC shall, to the fullest extent permitted under applicable Law
and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, the Surviving Corporation shall, to the
fullest extent permitted under applicable Law, indemnify and hold harmless, each
present and former director and officer of each GMC Subsidiary (collectively,
the "Indemnified Parties") against all costs and expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and settlement
amounts paid in connection with any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their
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capacity as an officer or director, whether occurring before or after the
Effective Time, for a period of six years after the date hereof. In the event of
any such claim, action, suit, proceeding or investigation, (i) GMC or the
Surviving Corporation, as the case may be, shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to GMC or the Surviving Corporation, promptly after
statements therefor are received and (ii) GMC and the Surviving Corporation
shall cooperate in the defense of any such matter provided, however, that
neither GMC nor the Surviving Corporation shall be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld); and provided, further, that neither GMC nor the Surviving Corporation
shall be obligated pursuant to this Section 12.13(b) to pay the fees and
expenses of more than one counsel for all Indemnified Parties in any single
action except to the extent that two or more of such Indemnified Parties shall
have conflicting interests in the outcome of such action; and provided, further,
that, in the event that any claim for indemnification is asserted or made within
such six-year period, all rights to indemnification in respect of such claim
shall continue until the disposition of such claim.
(c) The Surviving Corporation shall use its commercially reasonable
efforts to maintain in effect for three years from the Effective Time, if
available, the current directors' and officers' liability insurance policies
maintained by GMC (provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage containing terms and conditions
which are not materially less favorable) with respect to matters occurring prior
to the Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 12.13(c) more than an
amount per year equal to 150% of current annual premiums paid by GMC for such
insurance (which premiums GMC represents and warrants to be $249,720 in the
aggregate).
(d) In the event GMC or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of GMC or the
Surviving Corporation, as the case may be, or at Acquiror's option, Acquiror
shall assume the obligations set forth in this Section 12.13.
12.14 Jurisdiction and Process; Specific Performance. (a) In any action
between or among any of the parties, whether arising out of this Agreement or
otherwise, (i) each of the parties irrevocably consents to the exclusive
jurisdiction and venue of the federal and state courts located in the
Commonwealth of Pennsylvania; (ii) if any such action is
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commenced in a state court, then, subject to applicable law, no party shall
object to the removal of such action to any federal court located in the
Commonwealth of Pennsylvania; (iii) each of the parties irrevocably waives the
right to trial by jury; and (iv) each of the parties irrevocably consents to
service of process by first class certified mail, return receipt requested,
postage prepaid, to the address at which such party is to receive notice in
accordance with Section 12.3.
(b) The parties hereto agree that irreparable damage would occur to
Acquiror and Newco in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that Acquiror and Newco shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
WITNESS THE DUE EXECUTION AND DELIVERY HEREOF as of the date first stated
above.
GENESIS HEALTH VENTURES, INC.
By: /S/ Michael R. Walker
---------------------
Michael R. Walker
Chairman of the Board
and Chief Executive Officer
GERIATRIC & MEDICAL COMPANIES, INC.
By: /S/ Daniel Veloric
---------------------
Daniel Veloric
Chairman of the Board and
President
G ACQUISITION CORPORATION
By: /s/ Michael R. Walker
---------------------
Michael R. Walker
Chairman of the Board and
Chief Executive Officer
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EXHIBIT 99.B
STOCKHOLDER OPTION AND PROXY AGREEMENT
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STOCKHOLDER OPTION AND PROXY AGREEMENT
AGREEMENT, dated as of July 11, 1996, among G Acquisition Corporation, a
Delaware corporation (the "Purchaser"), Tomahawk Holdings, Inc., a Delaware
corporation ("Stockholder"), Tomahawk Capital Holdings, Inc., a Pennsylvania
corporation ("Capital"), Daniel Veloric ("Mr. Veloric") and Genesis Health
Ventures, Inc., a Pennsylvania Corporation ("Genesis"). Stockholder, Capital and
Mr. Veloric are referred to collectively hereinafter individually as an "Owner"
and collectively as "Owners".
WHEREAS, Genesis, the Purchaser and Geriatric & Medical Companies, Inc., a
Delaware corporation (the "Company") are entering into an Agreement and Plan of
Merger simultaneously herewith (the "Merger Agreement") pursuant to which the
Purchaser will merge with and into the Company (the "Merger"); and
WHEREAS, Stockholder is the owner of the number of shares of common stock,
par value $.10 per share ("Common Stock"), of the Company set forth on the
signature page hereof (the "Shares"); and
WHEREAS, Capital owns 100% of the outstanding capital stock of Stockholder;
and
WHEREAS, Mr. Veloric owns 100% of the outstanding capital stock of Capital;
and
WHEREAS, the Purchaser wishes to consummate the Merger pursuant to the
terms and conditions of the Merger Agreement; however, before executing the
Merger Agreement, Purchaser requires certain assurances and commitments from the
Owners as set forth herein; and
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WHEREAS, in order to induce the Purchaser to enter into the Merger
Agreement, the Owners desire to give the Purchaser an option to purchase the
Shares, and further desire to make certain other agreements regarding voting and
sales of the Shares, all upon the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. Grant of Option. The Stockholder hereby grants to the Purchaser, an
exclusive and irrevocable option (the "Option") to purchase any or all of the
Shares at a price of $5.75 per Share, subject to adjustment as provided in
Section 4 hereof (the "Exercise Price").
2. Exercise of Option.
a. The Option, subject to the conditions set forth in Section 3
hereof, may be exercised by the Purchaser, in whole or in part, at any time or
from time to time on and after the date hereof and prior to the earlier of (i)
the day following the Effective Time (as defined in the Merger Agreement) or
(ii) (A) one year after the termination of the Merger Agreement, if the Merger
is not approved by a vote of more than 50% of the shares of the Company or if
the Agreement is terminated after the Company has willfully taken actions or
willfully failed to take actions which cause a default under the Agreement or a
condition to Purchaser's consummation of the Agreement not to be met; (B) six
months after termination of an unsuccessful proposed Third Party Acquisition if
the Agreement had been terminated under Section 11.1(e) or (f) of the Merger
Agreement as a result of a proposed Third Party Acquisition,
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(C) upon termination of the Merger Agreement if the Merger Agreement is
terminated by the Company upon a default by Genesis and (D) three months after
the termination of the Agreement if the Agreement is terminated for any reason
other than 2(a)(ii)(A), (B) or (C) above. The Owners will not, prior to the
termination of the Option, take, or refrain from taking, any action which would
have the effect of preventing or disabling the Stockholder from delivering the
Shares to the Purchaser upon exercise of the Option or otherwise performing
their obligations under this Agreement.
b. In the event the Purchaser elects to exercise the Option in
accordance with Section 2(a) hereof, the Purchaser shall send a written notice
to the Stockholder specifying the number of the Shares the Purchaser will
purchase and the place and date (not later than ten business days nor earlier
than one business day) from the date such notice is mailed but not earlier than
the expiration of any applicable waiting period under Title II of the Hart-Scott
Rodino Antitrust Improvements Act of 1976 ("Hart-Scott Act") for the closing of
such purchase.
c. The Owners agree to comply with the following procedures for the
simultaneous exercise of the Option by purchase and sale and delivery of the
Option Shares by the Owners, the provisions of subsection (b) above to the
contrary notwithstanding (provided that the applicable waiting period under the
Hart-Scott Act has expired at the time of such delivery). The Purchaser shall be
entitled to deliver to the Stockholder a non-binding notice of intention to
exercise the Option, specifying the time, date and place of Purchaser's intended
exercise and purchase, no later than 24 hours prior to such time and date. Upon
receipt of such notice, the Owners shall take all steps necessary to enable them
to, and shall, effect the sale and delivery of
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the Option Shares to the Purchaser upon simultaneous exercise of the Option, as
provided and subject to the conditions in Section 3 below, at such place, on
such date (which may be a weekend or legal holiday), and at such time (which may
be outside of business hours, such as 12:02 a.m. on a given day). The Purchaser
shall have no liability to the Owners, and all of the terms and conditions of
this Agreement shall remain in effect, including this subsection (c), if the
Option is in fact not exercised in the manner contemplated by such non-binding
notice of intention.
3. Payment and Delivery of Certificate(s). At any closing of a purchase of
any of the Shares hereunder, (a) the Purchaser will pay to the Stockholder the
Exercise Price for all of the Shares so purchased by certified check, cashier's
check or wire transfer and (b) the Stockholders will deliver or cause to be
delivered to the Purchaser a certificate or certificates representing (or cause
to be made book-entry delivery to an account designated by the Purchaser of) the
number of the Shares so purchased, duly endorsed or accompanied by stock powers
duly executed in blank in the case of certificates.
4. Adjustment in Exercise Price. In the event that at any time after the
date hereof and up to and including the Effective Time the highest price paid by
the Purchaser (or any subsidiary or affiliate of the Purchaser) for any share of
Company Common Stock exceeds the Exercise Price set forth in Section 1 hereof
(as previously adjusted pursuant to this Section 4) then (a) the Exercise Price
shall thereupon be adjusted to the highest such price, and (b) as to Shares as
to which the Option has previously been exercised, the Purchaser or Genesis
shall promptly deliver to the Stockholder a certified check, cashier's check or
wire transfer in the
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amount of the product of (i) the amount of such excess price per share,
multiplied by (ii) the number of Shares as to which the Option has previously
been exercised; provided, however, that if shares of Company Common Stock are
purchased under any tender offer by Purchaser for shares of the Company by
Purchaser or other affiliate of Genesis (an "Offer"), the Exercise Price shall
in no event exceed the price paid in such Offer.
5. Additional Payment Under Certain Circumstances. If, after the Purchaser
has exercised the Option and prior to the consummation of the Merger, the
Purchaser directly or indirectly sells or otherwise disposes of any Shares
purchased pursuant to the Option (other than in the Merger or to Genesis or any
direct or indirect wholly owned subsidiary of Genesis, which transferee agrees
to be bound by this Agreement as if such transferee were the "Purchaser"
hereunder) then the Purchaser or Genesis shall pay to the Stockholder, as
promptly as practicable after such sale or other disposition, the amount (the
"Excess Amount") on a per share basis, if any, by which the net proceeds
received by the Purchaser upon the sale or other disposition exceeds the
aggregate price paid by the Purchaser to the Stockholder upon exercise of the
Option for the purchase of such Share. In the event that the Purchaser receives
securities or other property other than cash upon any sale or disposition of a
Share, the "price" of such Share which the Purchaser will be deemed to have paid
at the time the Purchaser purchased such Share for purposes of calculating the
Excess Amount, if any, shall be deemed to be the amount of cash received upon
the sale of such Share plus the fair market value of such securities and other
property at the time of receipt. For purposes of the foregoing, (i) the fair
market value of securities which are publicly traded shall be deemed to be the
closing price of such securities on
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the date of receipt (or, if not a business day, on the next preceding business
day) on the New York Stock Exchange, if the securities are listed thereon, or,
if not so listed, on any other national securities exchange on which such
securities are listed and principally traded, or, if not listed on any national
securities exchange, the average of the closing bid and asked prices in the
over-the-counter market on the date of receipt (or, if not a business day, on
the next preceding business day) and; (ii) the fair market value of any other
property shall be as determined by a nationally recognized investment banking
firm (the fees of which will be borne equally by the Company and the Purchaser)
mutually selected by the parties or, if none can be so selected, then as
selected by the President of the New York Stock Exchange. If the Purchaser has
not (and is not deemed to have) sold or disposed of all of the Shares which the
Purchaser has acquired by exercising the Option by April 1, 1997, then the
Excess Amount shall be determined solely with respect to each Share sold or
disposed of (or deemed to have been sold or disposed of) by such date and the
provisions of this Section 5 shall thereupon terminate with respect to Shares
not sold or disposed of (and not so deemed to have been sold or disposed of) as
of such date.
6. Certain Covenants of the Owners.
a. Until the expiration of the Option pursuant to Section 2 hereof,
except as described in Section 8(d) hereof, the Owners will not sell, transfer,
pledge, hypothecate or otherwise dispose of any of the Shares (or any interest
therein), and will not enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing, without the prior written
consent of the Purchaser, other than to the Purchaser pursuant to any Offer or
upon the exercise of the Option by the Purchaser or consummation of the Merger,
and the
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Stockholder is expressly permitted to tender its shares to Purchaser or
Genesis pursuant to any Offer and to be paid in accordance with any such Offer.
b. The Owners hereby agree promptly to endorse the certificate or
certificates representing the Shares with a legend referring to this Agreement
(in a form satisfactory to the Purchaser) and, if requested by Purchaser, to
take such actions as to enable the Stockholder to deliver such certificate or
certificates to an escrowholder satisfactory to the Purchaser (or promptly to
make book-entry delivery of the Shares to an account acceptable to the
Purchaser) to be held in escrow pending delivery hereunder.
c. From and after the date of this Agreement and prior to the earlier
of the Effective Time and the termination of the Merger Agreement according to
its terms, the Owners shall not (i) purchase, or enter into any contract to
purchase, any shares of Company Common Stock, (ii) tender any shares of Company
Common Stock pursuant to any tender offer or exchange offer other than any
Offer, or (iii) grant any person a proxy or other right to vote or direct the
vote of any shares of Company Common Stock, except in order to comply with
paragraphs 6(d) and (f).
d. When the Merger Agreement is submitted to the stockholders of the
Company for approval, the Stockholder shall take all action necessary as a
stockholder to approve and implement the Merger Agreement. The Owners shall not
seek to assert any appraisal right.
e. From and after the date of this Agreement and prior to the
termination of the Merger Agreement according to its terms, other than with
respect to any Offer
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and the Merger, the Owners will not form or participate in any Group (as that
term is used in Rule 13(d)(3) of the Securities Exchange Act of 1934, as
amended) which intends to seek control of the Company or any subsidiary thereof
(other than a Group of which Genesis is a member). The Owners will immediately
notify the Purchaser (i) if any Owner receives any inquiries or proposals
relating to the formation of such a Group and (ii) if any information is
requested from, or any negotiations or discussions are sought to be initiated
with, the Company or the Owners with respect to the formation of such a Group..
f. The Owners hereby agree that, from and after the date hereof and
until the Expiration Date (as defined in Section 7), at any meeting of the
stockholders of the Company, however called, or in connection with any written
consent of the stockholders of the Company, and to the extent permitted by
applicable law, the Owners shall vote (or cause to be voted) or act by written
consent with respect to the Shares (a) in favor of adoption and approval of the
Merger Agreement and the Merger and the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement; (b) against any
action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
contained in the Merger Agreement or of any of the Owners contained in this
Agreement; and (c) against any action, agreement or transaction that is intended
or could reasonably be expected to facilitate a person other than the Purchaser
or its affiliate in acquiring control of the Company ("Competing Transaction")
or any other action, agreement or transaction (other than the Merger Agreement
or the transactions contemplated thereby) that is intended, or could reasonably
be expected to impede, interfere or be inconsistent with, delay,
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postpone, discourage or materially adversely affect the consummation of the
Merger or the performance by the parties hereto of their respective obligations
under this Agreement, including, but not limited to: (i) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (ii) a sale, lease or
transfer of a material amount of assets of the Company and its subsidiaries or a
reorganization, recapitalization or liquidation of the Company or its
subsidiaries; (iii) a material change in the policies or management of the
Company, except as otherwise agreed to in writing by Purchaser; (iv) an election
of new members to the board of directors of the Company, except where the vote
is cast in favor of the nominees of a majority of the existing directors of the
Company; (v) any material change in the present capitalization or dividend
policy of the Company or any amendment of the Company's certificate of
incorporation or bylaws; or (vi) any other material change in the Company's
corporate structure or business. The Owners shall not enter into any agreement
or understanding with any person or entity prior to the Expiration Date to vote
any Company Common Stock or give instructions in any manner inconsistent with
clauses (a), (b) or (c) of the preceding sentence.
g. The Stockholder hereby agrees, while this Agreement is in effect,
to promptly notify the Purchaser of the number of any additional shares of
Company Common Stock acquired by the Owners, if any, after the date hereof.
h. The Owners hereby agree, except with respect to Purchaser and its
affiliates, on or after the date hereof, that the Owners shall not initiate,
solicit or encourage, directly or indirectly, any inquiries or the making of any
proposal with respect to any matter
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described in Section 6 (a), (c) or (e) hereof or any Competing Transaction,
participate in any negotiations concerning, or provide to any other person any
information or data relating to the Company or its subsidiaries for the purpose
of, or have any substantive discussions with any person relating to, or
otherwise cooperate with or assist or participate in, or facilitate, any
inquiries or the making of any proposal which constitutes, or would reasonably
be expected to lead to, any effort to attempt by any other person to seek to
effect any matter described in Section 6(a), (c) or (e) hereof or any Competing
Transaction, or agree to or endorse any Competing Transaction; provided,
however, that notwithstanding anything to the contrary contained herein, at any
time Mr. Veloric is a director of the Company, Mr. Veloric, in his capacity as a
director of the Company at such time, may take such actions in respect of a
Competing Transaction as the directors of the Company are permitted to take by
Section 6.5 of the Merger Agreement. The Owners agree to immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any possible Competing
Transactions or any matter described in Section 6 (a), (c) or (e) hereof.
i. Mr. Veloric shall cause each of the Stockholder, and Capital and
each other corporation, partnership or other entity controlled by Mr. Veloric
which owns, directly or indirectly, an equity interest in the Stockholder to
comply with the obligations of the Owners hereunder. Mr. Veloric hereby
guarantees the performance by each other Owner of its obligations hereunder.
7. Proxy. THE STOCKHOLDER HEREBY GRANTS TO A PERSON TO BE DESIGNATED BY
PURCHASER, AND ANY SUCCESSOR PERSON, THE
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STOCKHOLDER'S PROXY AND APPOINTS SUCH PERSON AS ITS ATTORNEY-IN-FACT (WITH FULL
POWER OF SUBSTITUTION) TO VOTE OR ACT BY WRITTEN CONSENT, TO THE FULL EXTENT
PERMITTED BY APPLICABLE LAW, WITH RESPECT TO THE SHARES IN ACCORDANCE WITH
SECTION 6 HEREOF. THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE, AND THE STOCKHOLDER WILL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH
OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND
HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY IT WITH RESPECT TO THE SHARES.
The proxy set forth in this Section 7 hereof shall terminate on the
Expiration Date. As used herein, the term "Expiration Date" means the earlier of
the (i) day following the Effective Time and (ii) the date which is one year
following the termination of the Merger Agreement in accordance with the terms
thereof or such shorter period as may be required by applicable law (unless
extended by the mutual written consent of the parties hereto).
8. Representations and Warranties.
The Owners represent and warrant to Purchaser that, subject to Section 8(d)
below:
a. The Stockholder is the sole owner of the Shares and has full right,
power and authority to sell and vote the Shares, to enter into and perform this
Agreement and to grant the Option granted herein. Capital owns 100% of the
outstanding capital stock of Stockholder. Mr. Veloric owns 100% of the
outstanding voting stock of Capital. The execution
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and delivery of this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by Mr. Veloric and the board of
directors of each of the Stockholder and Capital and the Agreement is the valid
and binding obligation of each Owner, enforceable against such Owner in
accordance with its terms;
b. Each of the Stockholder and Capital is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation;
c. None of the Owners owns any options, warrants or other rights to
acquire any shares of Company Common Stock except for the Shares;
d. The Stockholder does now, and at all times prior to the expiration
of the Option will, own the Shares free and clear of all liens, claims,
encumbrances security interests and rights or interests of others of any kind
other than the Purchaser, except for (i) security interests granted by the
Stockholder to Commerce Bank and Prudential Securities (collectively, the
"Current Lenders") in order to secure certain future obligations of the
Stockholder to the Current Lenders for borrowed money and (ii) future succeeding
security interests granted by Stockholder to future lenders (collectively, the
"Future Lenders") which replace the Current Lender's security interest in order
to secure obligations of the Stockholder to such Future Lenders provided that
Stockholder enters into an agreement prior to granting such security interest on
the following terms: The agreement will be reasonably satisfactory to Purchaser
and provide (i) that the Future Lenders authorize Purchaser to exercise its
Option hereunder by paying all or a portion of the Purchase Price to such Future
Lenders, (ii) that Purchaser shall otherwise enjoy the full benefits
contemplated hereunder and (iii) that Future
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Lenders will not interfere with Purchaser's rights hereunder. Owners further
agree that at no time may more than two Current Lenders and Future Lenders in
the aggregate have a security interest in the Shares;
e. The Owners agree to use their best efforts to enter into an
agreement with Current Lenders whereby Current Lenders will authorize Purchaser
to exercise its Option and enjoy the full benefits contemplated hereunder and
agree to not interfere with Purchaser's rights hereunder. Owners further agree
that upon any exercise of the Option, Purchaser can pay all or a portion of the
Purchase Price to Current Lenders or any Future Lenders in order to obtain the
Shares free and clear of any lien of any Current Lender or Future Lender on such
Shares; and
f. Upon exercise of the Option granted herein, the Purchaser will
receive good and marketable title to the Shares, free of all liens, claims,
encumbrances, security interests and rights or interests of others of any kind.
9. Description of Shares. For all purposes of this Agreement, the Shares
shall mean the Shares as defined in Section 1 hereof, and all securities or
property (including cash) issued or exchanged with respect to such Shares from
and after the date of this Agreement in connection with any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, or other
distribution to stockholders of the Company or combination of the Company Common
Stock or any other change in its capital structure. In the event of any such
change, the Exercise Price
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per Share shall be appropriately adjusted, so as to fairly and equitably
preserve, as far as practicable, the original rights of the Purchaser and
Stockholder hereunder.
10. Specific Performance. The Owners acknowledge that the Option granted to
the Purchaser herein, and all the agreements of the Owners contained herein are
unique and that the parties hereto will not have adequate remedies at law if any
of them fails to perform any of its obligations under this Agreement.
Accordingly, each party
hereto agrees that each other party hereto shall have the right, in addition to
any other rights which it may have, to specific performance and equitable
injunctive relief, without the requirement for the posting of a bond, if such
party shall fail or threaten to fail to perform any of its obligations under
this Agreement.
11. Miscellaneous.
a. Assignability. The rights and obligations of the Purchaser shall be
assignable by the Purchaser to and only to any direct or indirect wholly owned
subsidiary of Genesis, if and only if such other party shall, by a written
instrument reasonably satisfactory to the Stockholder, agree to assume all of
the Purchaser's obligations hereunder and to be bound by all of the terms and
conditions of this Agreement. The obligations of the Owners shall not be
assignable without the prior written consent of the Purchaser, and any purported
assignment without such prior written consent shall be null and void.
b. Third Parties. Nothing expressed or implied in this Agreement is
intended or shall be construed to confer upon or give to any third party any
rights or remedies by virtue of this Agreement or any exercise or non-exercise
of the Option granted hereby.
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c. Amendments. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
d. Notices. Except as otherwise expressly provided herein, all
notices, requests, claims, demands and other communications hereunder shall be
in writing and shall be furnished by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier services, such as
Federal Express), or by any courier service such as Federal Express providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Owners:
(i) Daniel J. Veloric
1000 Broadmoor Avenue
Bryn Mawr, PA 19010
Fax: (215) 748-8118
(ii) Tomahawk Capital Holdings, Inc.
Tomahawk Holdings, Inc.
1000 Broadmoor Avenue
Bryn Mawr, PA 19010
Fax: (215) 748-8118
Attn: Chairman and Chief Executive Officer
Attn: Law Department
With a copy to:
Mesirov Gelman Jaffe Cramer & Jamieson
1735 Market Street
Philadelphia, PA 19103-7598
Fax: (215) 994-1111
Attn: Robert P. Krauss, Esquire
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If to the Purchaser:
(i) G Acquisition Corporation
148 West State Street
Kennett Square, PA 19348
Fax: (610) 444-7483
Attn: Chairman and Chief Executive Officer
Attn: Law Department
With a copy to:
Blank Rome Comisky & McCauley
Four Penn Center Plaza
Philadelphia, PA 19103
Fax: (215) 569-5555
Attn: Stephen E. Luongo, Esquire
If to Genesis Health Ventures, Inc.:
148 West State Street
Kennett Square, PA 19348
Fax: (610) 444-7483
Attn: Chairman and Chief Executive Officer
Attn: Law Department
With a copy to:
Blank Rome Comisky & McCauley
Four Penn Center Plaza
Philadelphia, PA 19103
Fax: (215) 569-5555
Attn: Stephen E. Luongo, Esquire
The addresses set forth above may be changed by any party hereto upon furnishing
to the other parties hereto a notice of such change in accordance with the terms
of this paragraph.
e. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive law of the Commonwealth of Pennsylvania
applicable to contracts made and to be performed in such commonwealth.
f. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
g. Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction thereof.
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h. Time of the Essence. The parties hereto agree that time shall be of
the essence in the performance of all obligations hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
TOMAHAWK CAPITAL HOLDINGS, INC.
By: /s/ Daniel J. Veloric
------------------------------
Name: Daniel J. Veloric
Title: Chief Executive Officer
TOMAHAWK HOLDINGS, INC.
By: /s/ Daniel J. Veloric
-------------------------------
Name: Daniel J. Veloric
Title: Chief Executive Officer
/s/ Daniel J. Veloric
-------------------------------
Daniel J. Veloric
Number of Shares: 3,748,178
G ACQUISITION CORPORATION.
By:/s/ Michael R. Walker
----------------------------
Name: Michael R. Walker
Title: Chairman and Chief
Executive Officer
GENESIS HEALTH VENTURES, INC.
By: /s/ Michael R. Walker
---------------------------
Name: Michael R. Walker
Title: Chairman and Chief
Executive Officer
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